Palm oil stocks rise in Singapore as Indonesia lifts export ban

Shares of Singapore-listed palm oil producers surged at the start of Asian trading, after Indonesia announced it would end a temporary ban on palm oil exports on Monday.

Among plantation stocks listed in Singapore, Bumitama Agri Ltd. P8Z,
+5.33%
recently rose 8.0% on Friday, Golden Agri-Resources Ltd. E5H,
+9.09%
rose 7.3% and First Resources Ltd. EB5,
+2.86%
added 3.8%. Olam Group Ltd. VC2,
+1.38%
and Wilmar International Ltd. F34,
+4.61%
increased by 2.1% and 2.7% respectively.

Shares of Malaysia-listed plantations, which had initially risen when the ban was introduced in late April, fell slightly. IOI Corp. Bhd. 1961,
+0.23%
lost 0.7% and Kuala Lumpur Kepong Bhd. 2445,
-0.15%
was down 0.6%.

Indonesia, the world’s largest palm oil producer, last month imposed export restrictions on some palm oil products in a bid to calm soaring oil prices cooking, a decision that has worsened the global shortage of edible oils.

The Indonesian government said on Thursday it would end the ban due to improved wholesale prices, although analysts noted end-user prices remain relatively high and said an important factor may have been the unpopularity of the ban among the country’s powerful palm oil exporters and regional governments.

“A growing awareness that the export ban was beginning to hurt palm oil producers without benefiting end consumers as much had caused the reversal,” OCBC economist Wellian Wiranto said in a note.

Palm oil accounted for about 13% of Indonesia’s export earnings in 2021, and from a business perspective, “allowing producers to sell overseas again is good news,” said he declared.

Despite the short-lived nature of the ban, Citi analyst Lester Siew said in a research note that he expects it to have an impact on the earnings growth of Indonesia-based plantations in the second trimester.

“In addition, the backlog of planter export shipments may not be cleared in time given the possibility of logistical bottlenecks, which would cause sales recognition to be postponed until the third quarter,” he said. he declared.

Write to Yi Wei Wong at yiwei.wong@wsj.com


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Felix J. Dixon