KUALA LUMPUR, Feb 28 — Sime Darby Plantation Bhd, the world’s largest oil palm plantation company by planted area, expects crude palm oil (CPO) prices to firm up from April to August this year to between RM2,250 and RM2,450 per tonne in line with the higher trend seen in other edible oils globally.

Executive deputy chairman and managing director Tan Sri Mohd Bakke Salleh said currently, the commodity was receiving strong demand from China and India.

“CPO prices are very much influenced by the prices of other edible oils, soybean oil for example, and we also see the trend from the market whereby competing oils are also seeing higher purchases due to demand,” he told reporters after the announcement of the company’s results for the six-month financial period ended Dec 31, 2018.

However, Mohd Bakke said, the company did not expect the price of the golden crop to be higher than RM2,002 per tonne in March.

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“But from (April) onwards, God willing, we can look for an uptrend,” he said.

According to him, the company started the year with a much higher targeted price figure but had reduced the projection for 2019 tracking the higher production of the commodity and also its competitors.

Further weakening the performance of the local CPO are the ongoing US-China trade war, the news flow coming from the European Union saying that it would ban the use of palm oil-based biofuel and the surplus production in Indonesia.

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“All these negative news came into the market and had affected the price of our shares. Just for about two weeks, the price came down and as a result, a few institutions have been selling our shares,” he said.

Asked on the outlook of soybean oil which was heavily imported by China from the US, Mohd Bakke said Sime Darby Plantation projected its price and demand going up and that the CPO price would follow suit.

The US soybean industry has been damaged due to the US-China trade dispute.

It was reported that in 2017, about 57 per cent of all US soybean exports went to China. But this number had been slashed to only 20 per cent this year due to the trade war.

“We hope to see the spat between the two to come to an end, which could help improve the uptake of soybean oil by China,” he added.

Crude palm oil, which is one of the major contributors to the Malaysian economy, has badly suffered due to the trade war.

On production, Mohd Bakke said Sime Darby Plantation had budgeted a higher yield from its operations in Indonesia, Malaysia and Papua New Guinea.

Today the company reported its financial performance for the six months ended Dec 31, 2018, which saw a lower net profit of RM244 million, down by 83 per cent from RM1.44 billion in the corresponding period of the previous year.

The decline was largely due to the non-recurring net profit of RM749 million in the previous year relating to the gain on sale of land to a related party and a one-off writeback of donation to Yayasan Sime Darby, as well as a lower recurring profit before interest and tax.

Revenue was down 14 per cent to RM6.54 billion versus RM7.63 billion previously. — Bernama