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July 28, 2008
Malaysia to shore up palm oil prices

July 18, 2008
Malaysia's Sime Darby to build $103m palm oil refinery


August 20, 2008

UBS cuts palm oil price, earnings forecasts
UBS AG lowered its price forecast on crude palm oil by 28 percent, and its earnings forecast for producers by as much as 30 per cent, on concern lower crude oil prices may damp demand for biofuel made from vegetable oil, Bloomberg reported.

UBS Investment research cut its 2009 crude palm oil forecast to $846 a ton, from $1,173, according to a report prepared by analyst Alain Lai. It lowered its average price forecast for 2008 by 16 percent to $935 a ton and reduced earnings forecasts for producers by between 4 percent and 30 percent for the same period.

“We had previously highlighted the potentially negative earnings impact from fertiliser cost, the risk of biofuel policies reversing and the risk of the sector de-rating,” Lai said in a summary published today. “The current consolidation in palm oil price, sparked off by a fall in crude oil price, adds to the negative outlook.”

Palm oil futures in Malaysia have dropped 46 per cent from a record 4,486 ringgit ($1,349) on March 4. Prices plunged the past month, mirroring a decline in crude oil, and fell 2 percent, to 2,436 ringgit a ton yesterday (August 18).

Crude oil has dropped 22 percent from a record $147.27 a barrel on July 11. The contract for September delivery rose 0.3 percent to $114.92 in after-hours electronic trading at 10 am in Singapore.

Price targets for palm oil producers were lowered by between 6 and 35 percent, Lai said without providing examples. Most of those with the highest market values were given a rating of “either neutral or sell,” he said.

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