CLSA Palm Oil Conference

Palm Oil Conference
Our Malaysian strategist Claire Chin wrote a report on CPO sector. She attended the Palm Oil Conf 2009 held in KL last week. It is interesting that 1,200 delegates attended the event, surprising Bursa Malaysia which was initially expecting only 500-600 delegates. It is worth noting that speakers at the conf expect crude-CPO correlation may return. If crude hits $70/bbl, CPO could be >RM2,400/t.

Key points from the report:
In sharp contrast to the mood last year, speakers were generally more somber this year. CPO guru Dorab Mistry eats humble pie.
Experts expect CPO prices of RM1,500-2,368/t.
Global CPO supply to grow by 4.1-4.6%, or 1.5-1.7m tonnes in 2009.
Speakers believe that crude and CPO price correlation will return.
If crude hits $70/bbl, CPO could be >RM2,400/t.
Supply side: CPO yields to fall to 4.41t/ha from 4.55t/ha in 2008. Key reasons: biological yield cycle + reduced fertilizer usage.
Global CPO supply to grow 4.1-4.6% in 2009, supply growth in Malaysia +1.1%, Indonesia 7.9%.
One anecdote: biodiesel will eventually get to where diesel is today. The only problem is that the long gestation period could mean a couple of generations!!