Malaysian palm oil inventory decline further in Feb09. Lowest since Sep07.
Please see comment from our analyst Wiilianto below:
We see limited downside on palm oil plantation stocks. Most were hammered down badly and are still 60%-90% below the high in 2008. Our preferred Indo Plantation stocks: Astra Agro, Lonsum, Sampoerna Agro.
Demand for food (palm oil) seems to remain relatively resilient despite the economic crisis. Inventory of palm oil continue to fall as production decline faster than demand due to tree stress (palm trees taking a break after a bumper harvest last year). Note that some palm oil farmers use less fertiliser during the low CPO price period in 4Q08-1Q09 which will prolong the below normal harvest period until 4Q09-1Q10.
Similar trend is seen in soybean where Argentina's farmers use less fertiliser in this planting season due to tight financing.
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