KUALA LUMPUR (Feb 5): Shares of palm oil-related companies — led by Kuala Lumpur Kepong Bhd (KLK) and Sarawak Oil Palms Bhd (SOP) — climbed as palm oil inventories were seen to fall 12% to 1.76 million tonnes in January, the lowest in two and a half years.

KLK closed up 56 sen or 2.45% at RM23.44, emerging as the top gainer on Bursa Malaysia.

Meanwhile, SOP rose 23 sen or 6.74% to close at RM3.64, also among the top ten gainers on Bursa Malaysia.

At the same time, the Bursa Malaysia Plantation Index was up 79 points or 1.11%. Besides KLK and SOP, other stocks that enjoyed significant gains were Rimbunan Sawit Bhd (+16.36%), TDM Bhd (14.00%), Pinehill Pacific Bhd (+7.69%), and Jaya Tiasa Holdings Bhd (+11.72%).

Reuters reported earlier today that Malaysian palm oil inventories will likely tumble to its lowest since June 2017, as dry weather and lower fertiliser usage in early last year suppressed output to near four-year lows, its survey showed.

Production also likely dropped 9% to 1.21 million tonnes in January from the month before, its lowest since March 2016.

Meanwhile, January exports likely plunged 8.2% month-on-month to 1.28 million tonnes as Malaysia faced lower purchases from its biggest customers India and China, the newswire added.

At 4.10pm CPO futures were trading at RM2,798.

CGS-CIMB Research regional head of plantations research Ivy Ng project the CPO price to trade in the range of RM2,500 to RM2,700 per tonne in February.

“Currently, the CPO market appears to be more concerned over supply shortfall issues, than potential demand rationing due to slower global growth from the virus impact,” she said in a note today.

Source : The Edge Markets