More CPO price upside. Golden Agri-Resources (GAR) should continue to get a good lift from the sustained run-up in CPO (crude palm oil) prices over the next few months, underpinned by supply-side issues brought on by bad weather conditions in both Malaysia and Indonesia - two of the largest CPO producers in the world. Also likely to keep prices buoyed, the persistent rise in the price of edible oil substitutes like soy and corn, where the supply is also blighted by errant weather conditions; the sharp rise in crude oil prices back to around US$100/barrel on the back of worries of widespread unrest in the Middle East may also reignite the bio-diesel link (see Exhibits 1 and 2 for the price correlations).
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