PLANTATION
$IOICORP / 1961 (IOI CORPORATION BERHAD) $HSPLANT / 5138 (HAP SENG PLANTATIONS HOLDINGS BERHAD) $FGV / 5222 (FGV HOLDINGS BERHAD) $GENP / 2291 (GENTING PLANTATIONS BERHAD) $KLK / 2445 (KUALA LUMPUR KEPONG BERHAD)
Research by HLIB
Neutral (Maintain)

“USDA 2024 prospective planting”

USDA’s prospective planting report indicated that US farmers intend to plant 90m acres of corn (-4.9% vs. 2023’s planted acreage) and 86.5m acres of soybean (+3.5% vs. 2023’s planted acreage). The shift towards more soybean over corn areas is possibly due to downtrend in corn prices amid ample global supplies and sluggish demand for US exports. The latest planting intention for soybean, coupled with the 9% YoY increase in USDA’s soybean inventory signals sufficient soybean supply in coming marketing year, hence capping near-term prices of soybean and CPO. Prospective planting aside, palm’s narrowed price discount against soy oil, impending seasonal palm output recovery, and the absence of notable demand-push catalyst indicate that current high palm price will not sustain over the longer term. As such, we maintain our 2024-25 CPO price assumptions of RM4,000/tonne and RM3,800/tonne, and reiterate our NEUTRAL stance on the sector. For exposure, our top picks are IOI (BUY; TP: RM4.66) and HSP (BUY; TP: RM2.06).

Analyst(s):
Chye Wen Fei
wfchye@hlib.hongleong.com.my