Olam (O32.SG) is off 0.6% at $3.18 in modest volume, pausing for a breather after recent gains, which were driven by the commodity trader’s move to set up a US$200 million ($262 million) sugar refinery in Nigeria with diversified African business group Lababidi.

The venture is deemed positive in the long term as margins are expected to be sharply higher than what Olam now commands.

But as the refinery won’t start operations until mid-2013, the stock is not likely to run up further on this news after the recent rise.

Still, houses like OCBC, which has a Buy call and a $3.53 target, remain bullish on Olam’s overall outlook.

OCBC is projecting a 17% earnings CAGR over the next 2 years; “profits may surpass expectations should the group embark on more M&A activity with near-term earnings accretion.”

The 10-day moving average, last at $3.13, is tipped as the immediate support.