By Yi Wei Wong
Shares of Singapore-listed palm oil producers jumped in early Asian trade, after Indonesia said it will end a temporary ban on palm oil exports on Monday.
Among Singapore-listed plantation stocks, Bumitama Agri Ltd. /zigman2/quotes/201464113/delayed SG:P8Z -3.01% was recently 8.0% higher on Friday, Golden Agri-Resources Ltd. /zigman2/quotes/204658911/delayed SG:E5H -2.00% rose 7.3% and First Resources Ltd. /zigman2/quotes/204807261/delayed SG:EB5 -0.61% added 3.8%. Olam Group Ltd. /zigman2/quotes/204597429/delayed SG:VC2 -1.32% and Wilmar International Ltd. /zigman2/quotes/207345635/delayed SG:F34 +0.99% were up 2.1% and 2.7%, respectively.
Malaysia-listed plantation shares, which initially rose when the ban was introduced in late April, edged lower. IOI Corp. Bhd. /zigman2/quotes/201824363/delayed MY:1961 +1.56% shed 0.7% and Kuala Lumpur Kepong Bhd. /zigman2/quotes/208476743/delayed MY:2445 +0.73% was down 0.6%.
Indonesia, the world’s largest palm oil producer, last month imposed export restrictions on some palm oil products in an effort to cool soaring cooking-oil prices, a move that worsened the global shortage of edible oils.
The Indonesian government on Thursday said it will end the ban due to an improvement in bulk prices, although analysts noted that end-user prices remain relatively high and said that a significant factor may have been the ban’s unpopularity among the country’s powerful palm oil exporters and regional governments.
“An increasing realization that the exports ban was starting to hurt palm oil producers without benefiting the end-consumers all that much had prompted 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 trade perspective, “allowing the producers to sell abroad once again is a piece of good news,” he said.
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 Indonesia-based plantations’ earnings growth in the second quarter.
“In addition, planter’s backlog of export shipments may not be cleared in time given the possibility of logistics bottlenecks, which would result in sales recognition being deferred to the third quarter,” he said.
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