Investing

Palm Oil Price Trend

The MPOB conference finished yesterday with 2 famous analysts giving talks on the palm outlook. They are Dorab Mistry and James Fry, both of whom were quite bullish on the price outlook. You can read the detail of their speeches if you click these links:

http://www.thestar.com.my/Business/Business-News/2014/03/06/Dry-spell-to-affect-CPO-Prices-could-hit-RM3000-per-tonne/

http://in.reuters.com/article/2014/03/05/palmoil-outlook-fry-idINL3N0M149C20140305

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Dorab said that the price would maintain at 3000 and rise to 3500 at the end of the year if the dry weather continues, but then he’s usually wrong so not sure how much people took heed.

Fry on the other hand said that price rises would be capped at 3000 because of competing oils.

In response to this the future market has not moved much yet, but the mood is very bullish. On the stock side, I guess this rise is because analysts no longer believe that the recent price rise is temporary, but instead may be here to stay for a year at least. A lot of people before thought that it was shooting up because of speculation that naturally would come back down, but I guess the speeches might have changed their mind.

Readers will recall that many senseless critics ridiculed me and accused me of promoting Jaya Tiasa when I told them I bought 4.5 million JT shares at Rm 2.04 on 31th Dec 2013, about 2 months ago. Since the start of 2014, JT has been climbing up much better than KLCI.

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Of course, there are some clever and alert investors who could decide and took advantage of my writing. But there are also some doubting Thomases who cannot make up their mind until now when it closed at Rm 2. 66 up 13 sen today.

To buy or not to buy is the big question.

The price increase makes a lot of difference to all plantation companies because the additional profit does not require any additional effort. It is like getting extra money for doing nothing.

What the experts said in their speeches should help you to decide. I believe the palm oil price up trend is sustainable for the next one or two years. Almost all the plantation shares went up with high volumes today. The total volume traded today for Jaya Tiasa was 5.75 million shares which is unprecedented, I think.

When the price shoots up with very big volume, it means that there are a lot more buyers than sellers. They want to buy as soon as possible because they think that the price will go up tomorrow.

I am not asking you to buy Jaya Tisa or any other share. But if you decide to buy, you are doing it at your own risk.

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