Plantation stocks seeing good gains; Golden Agri (E5H.SG) +3.8% at $0.685, Indofood Agri (5JS.SG) +5.1% at $2.70, Kencana Agri (F9M.SG) +2.4% at $0.420, First Resources (EB5.SG) +4.0% at $1.29, Wilmar (F34.SG) +1.1% at $6.47. 

 

DBS, which rates First Resources, Indofood at Buy, Kencana at Hold, raises 2010-12 CPO price estimates by 2%-11% on revised USD forecasts; “in view of weaker USD over the next few years and an absence of U.S. Fed rate hike until 3Q11, we have now shifted soybean, soybean oil, and palm oil price movements one notch above previous levels”.

 

Expects steeper-than-usual drop in FFB (fresh fruit bunch) yields, potential delays in South American soybean planting (due to strengthening La Nina) to boost 1Q11 prices, while rising biofuel mandates, higher substitute demand may push soy oil prices higher in 1H11, should also support CPO. Cuts Wilmar to Hold on reduced processing margin forecasts.