Plantation stocks are counting on these 3 things for a bountiful year

SINGAPORE (Dec 20): DBS Vickers Securities has upgraded its view on the plantation sector to “neutral” on improving fundamentals, as well as expectations of yield recovery and steady prices to boost the earnings of plantation companies in FY17F.

In the research house’s 2017 Outlook report, DBS analyst Ben Santoso says the plantations sector will be shaped by three key issues over the next 12 months: continued tight inventory, higher biodiesel blending, and a strong US dollar.

According to him, the 8% y-o-y recovery in global palm oil supply next year to 64.3 million metric tonnes (MT), although significant, is “no relief”. This is because he expects biodiesel blending in Indonesia to pick up, together with export levy collection.

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