PETALING JAYA: The earthquake that hit Padang, west Sumatra will not have a big impact on Malaysian companies as Padang is not a “hot spot” for Malaysian palm oil producers. AmResearch believes the earthquake might, however, cause a short-term disruption in palm oil supply from Indonesia. “Although palm oil may be kept for a couple of months, it was better for it to be shipped as fast as possible so that the percentage of free fatty acids – which would affect the quality of palm oil – will not increase,” the research house said in a sector report yesterday. However, it pointed out that as west Sumatra was not a major producer of Indonesia’s palm oil, any short term disruption on palm oil supply from Padang would not have a significant impact on processing of crude palm oil (CPO). A Bloomberg report quoted head of organisational affairs of Indonesian Palm Oil Association Bambang Aria Wisena as saying that palm oil shipments from Sumatra might be delayed by more than a week after access to a port was blocked and factories and roads damaged. He also said that about 90,000 tonnes of palm oil for October delivery might be delayed. An analyst from a local research house said: “As far as I am aware, Sime Darby Bhd, IOI Corp Bhd and Kuala Lumpur Kepong Bhd are not affected as their plantations are not located in west Sumatra.” Another analyst from a local research house said Padang was not a major planting area for Malaysian plantation companies. “Some of the plantations of Malaysian companies are in Kalimantan and other parts of Sumatra, not in Padang,” he said. According to an industry player, none of the listed plantation companies had any oil palm estates in Padang and the only sizeable oil palm estate there belonged to an individual. “Among the Malaysian plantation companies, Sime Darby has the largest exposure to Indonesia. “However, the group’s oil palm estates are located mainly in Jambi (north Sumatra), Riau (central Sumatra) and Kalimantan,” AmResearch said. It said of Sime Darby’s 248,883ha in Indonesia, 21% was in Jambi, 22% in Riau and 43% in Kalimantan. As for Kuala Lumpur Kepong, its oil palm estates in Indonesia were located in Riau, Belintung Island and Kalimantan. IOI and IJM Plantations Bhd’s exposure to Indonesia was through their respective landbank in Kalimantan. AmResearch said Indofood Agri Resources had about 406,519ha in Indonesia, of which roughly 46% were already planted with oil palm. It had palm oil estates in north, central and south Sumatra but none in Padang. Meanwhile, Wilmar International Ltd had about 573,405ha of plantation landbank in Indonesia, of which 39% was already planted. “Most of its oil palm estates are located in west and central Kalimantan, and south and north Sumatra,” the research house said. It maintained its positive stance on the plantation sector and reckoned that CPO prices should find support from weaker palm oil production towards year-end. Source : The Star by Lee Sian Kong