Nestle also drops Sinar Mas Group

Nestle SA has followed Unilever in dropping Sinar Mas Group from the list of palm oil supplier after Greenpeace called on the world's largest food producer to cut ties with the company controlled by Eka Tjipta Widjaja family, Bloomberg reported an hour ago.

According to the report, Nestle replaced Sinar Mas with an unidentified supplier. Earlier on Wednesday, Greenpeace published a report saying Sinar Mas has unlawfully destroyed rain forests to set up palm oil plantations, Bloomberg reported.

Who will be the next to drop Sinar Mas?

Sinar Mas Group's plantation units are listed in both Indonesia and Singapore stock exchanges. PT SMART Tbk is listed on IDX, while GoldenAgri Resources Ltd is listed on SGX. SMART declined 2.36% on IDX with thin trading, while GoldenAgri closed unchanged with substantial trading on SGX. GoldenAgri stock has surged over 100% in the past nine months.

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Farmers as human shield for blacklisted CPO producers?

What a shameful act! Business associations condemned Unilever for its decision to blacklist some CPO producers from Indonesia. They said Unilever's action has cut the price for fresh fruit bunch (FFBs) 10% already. This is strange because both prices in futures and physical markets increased substantially in recent months.

Poor Indonesian farmers! Apkasindo told journalists at Hotel Shangri-La Friday night that few months ago the FFBs were Rp1450/Kg, reduced to Rp1300 at the moment.

CPO Futures contracts for May delivery in Malaysia closed at RM2670 per ton on Friday, far above the prices in the same month last year (below RM2000/ton). In the physical market, CPO prices in Indonesia are currently above Rp7600 per Kg or about US$825 per ton.

Look at how much profit companies like Astra Agro, London Sumatra Plantation (LSIP), or Golden Agri Resources, Indofood Agri Resources, Wilmar, or First Resources have booked. Indofood Agri reported net profit of Rp1.5 trillion last year; Golden Agri (Sinarmas) reported net profit US$607 million or Rp5.65 trillion, First Resources (Surya Dumai Group) at Rp1.24 trillion; Astra Agro Rp1.66 trillion. Bear in mind, all of these guys operate plantations in Indonesia. So, four business groups generated net profit of Rp10 trillion last year from plantation, mainly palm oil, last year.

Why they keep suppressing farmers with low prices of FFBs? Bear in mind, palm oil producers generated the best profit margins, but please ask farmers and workers how much they make? Please don't use them as "shield" for your ...And for tax officers, make sure these companies don't evade tax. One group has been alleged for doing so (Rp1.3 trillion?)...Others?

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Stronger CPO boosts plantation stocks

CPO futures contracts for May delivery closed substantially higher at RM2674 on Malaysia Derivatives Exchange yesterday. Plantation stocks gained substantially this morning in Malaysia, Singapore, and Indonesia.

Indofood Agri Resources opened higher by 2.5% on SGX, while First Resources, Wilmar, and Kencana Agri---all with plantations in Indonesia, gained 1.9%, 1.5%, and 1.7% respectively. On IDX, Tunas Baru, Sampoerna Agro, and PP London Sumatra advanced further, while BW Plantation declined 1.45%.

CPO futures opened slightly higher this morning with April-June contracts increased 7-11 RM/ton. In Jan and Feb 2010, the average spot month settlement prices were RM2554.9 and RM2541 per ton respectively, increased 35% and 31% from the same months of 2009. (Teguh Hidayat)

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CPO falls further

CPO Futures contracts for April delivery dropped RM42 or 1.7% to RM2453 per ton on Malaysia Derivatives Exchange this morning, while May delivery declined RM30 per ton. The commodity was mainly under pressure last week on stronger USD and higher than expected stockpiles.

Still, this month's average price is far above the January 2009 average of RM1891 per ton. But it is far below January 2008's average of RM3212 per ton. The highest monthly average price last year was in May at RM2833/ton. Early this year, CPO futures have crossed RM2700/ton, but retreated on stronger USD, weakening of crude oil, and higher stockpiles in Malaysia and Indonesia.

Indonesia, the largest CPO exporter, expects a 10% export growth this year to about 17.6 million tons. Traders said CPO may test levels of RM2350-2450 on an estimated higher stockpiles this month.

Plantation stocks opened mixed in the region this morning, with Golden Agri gained 2.63% on SGX, while Bakrie Sumatra lost 3% on IDX. Sampoerna Agro and BW Plantation also lost 2.5% and 3.45% respectively on IDX.

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Salim appoints 5 investment banks

PT Salim Ivomas Pratama, a 90%-owned company of Indofood Agri Resources Ltd, has appointed five investment banks as underwriters of Rp1 trillion bonds.

Indofood Agri, listed in SGX, said the underwriters are PT Danareksa Sekuritas, PT CIMB Securities Indonesia, PT Kim Eng Securities, PT Mandiri Sekuritas, and PT OSK Nusadana Securities Indonesia.

Indofood Agri's stock price dropped from S$2.87 in July 2008 to as low as S$0.375 in October 2008 or 86% crash. But since then, with the recovery of CPO prices, the stock regained grounds and closed at S$1.52 today to reflect a 304% gain.

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Astra Agro profit drops 51%

Plantation giant PT Astra Agro Lestari (AALI) Tbk booked net profit of Rp769.8 billion in the first half 2009, slashed 51% from the same period last year on lower prices of crude palm oil.

Astra Agro reported net sales revenue of Rp3.537 trillion, declined 23% from the same period last year. With higher cost of goods sold and general expenses, AALI recorded operating profit of Rp1.155 trillion, dropped 50% from Rp2.35 trillion in H1 2008.

With annualized EPS of Rp978, the stock is currently traded at PE multiple 19. AALI currently has market capitalization of US$2.89 billion.

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KL Kepong acquires Bumi Makmur

Malaysian-listed plantation giant Kuala Lumpur Kepong has on July 14, 2009, entered into agreements to acquire 95% shares of PT Bumi Makmur Sejahtera Jaya, a company with concession to develop oil palm plantation in Belitung Island.

KL Kepong told Kuala Lumpur Stock Exchange this morning that it acquired the shares for cash consideration of Rp6.66 billion. KL Kepong acquired the shares through its subsidiary PT Steelindo Wahana Perkasa (SWP) from Tjong Hasan Agus Salim and Tjhang Ardy Fadrinata.

Bumi Makmur Sejahtera holds a certificate of izin lokasi for approximately 2,336 Ha located in Desa Mentawak and Desa Air Kelik, Kepala Kampit sub-regency, Belitung Timur Indonesia, adjacent to SWP's plantations. 

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Palm Oil prices

KPB PTPN, joint marketing office of state-owned plantations, withdrawn all 10 packages of 9,000 tons of crude palm oil (CPO) auctioned today due to low bids. 

The bids were in the range of Rp5400 to Rp6086 per Kg. KPB PTPN closed the auction with price set in the range of Rp6020 to Rp6254 per Kg.

Separately, giant palm oil producer PT Astra Agro Lestari (AALI) Tbl also withdrawn eight packages of 10,250 tons of CPO auctioned today because bids were significantly below the ideal price. The bids were in the range of Rp5720 to Rp6076 per Kg, while AALI's ideal prices were in the range of Rp5925 to Rp6250 per Kg.

Meanwhile, CPO futures contracts in Malaysia Derivative Exchanges closed at RM1990 per ton for the benchmark September delivery, declined RM20 per ton from last week's closing. 

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Baltic Dry Index weakens further

Baltic Dry Index, an indicator for worldwide shipping of commodities, dropped further to close at 2985 on Friday, July 10. Meanwhile, thermal coal spot prices in Newcastle, a benchmark for Asian market, closed lower by 2% last week.

Baltic Dry Index (BDI) lost 18% in one week from 3672 in July 3rd, 2009. BDI lost 30% from June 3rd, a clear sign of weaknesses in commodities market. CPO prices in Malaysia Derivatives Exchange closed at RM2010 per ton last Friday.

Bids for October delivery this morning reached as low as RM1895 per ton, while the benchmark September delivery at RM1990 per ton.

Meanwhile, thermal coal spot prices in Newcastle port, Australia, declined 2% for the week ended July 10 to US$71.63 per ton, while in Richard Bay (South Africa) and ARA (Europe) gained slightly to US$60.69 and US$66.01 per ton respectively.

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CPO falls further

Physical tender of crude palm oil (CPO) organized by KPB PTPN, joint marketing office of state-owned plantations, closed in the price range of Rp5910-6144 per Kg in Jakarta on Thursday. 

Eleven packages of 11,750 tons were auctioned off by KPB PTPN. PT Musim Mas won seven packages and one package withdrawn on low bids.

Separately, giant CPO producer PT Astra Agro Lestari (AALI) Tbk auctioned 7900 tons of CPO on Thursday and closed in the price range of Rp5895-6169 per Kg, dropped significantly from Rp8875 per Kg in early May. 

In Rotterdam, CPO closed at US$625 per ton (CIF). In Malaysia Derivatives Exchange, CPO futures contracts for the benchmark September delivery closed higher at RM2047 per ton on Thursday. This morning, CPO futures moved in narrow range.

Plantation stocks opened mixed this morning with Indofood Agri Resources dropped 3.51% in Singapore Stock Exchange (SGX) and Sampoerna Agro lost 4.6% in IDX. Golden Agri Resources also lost 3.12% in SGX, while Astra Agro gained 2% in Jakarta. IJM Plantations and PPB Group lost 1.6% and 1.7% respectively in KLSE.

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Baltic Dry Index lost another 15%

Baltic Dry Index, a leading indicator of shipments of commodities worldwide, lost another 15% this week to close at 3107 on Wednesday. This is another sign of weakening of commodities. 

Baltic Dry Index (BDI) has lost 27% since early June as commodities retreated after months of rally. CPO futures dropped 30% since May to close at RM2002 per ton on Wednesday. The benchmark September contract inched up this morning to RM2021 per ton.

Uncertainties over iron ore contracts with China, the world's biggest steel producer and buyer of more than half of all traded iron ore, also added to the pressures. China had initially sought a bigger price cut of up to 45% versus 2008.

Spot iron ore prices actually are already at their four-month high of above US$82 a ton delivered in China.

Thermal coal prices meanwhile under pressure again this week due to the fall of crude oil prices to below US$61 per barrel.

Indonesia is a major commodities player in the region, especially for CPO, thermal coal, rubber, and metal ores. Indonesia Stock Exchange (IDX) is also a commodity-heavy stock market.

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Astra CPO output ups 15%

Plantation company PT Astra Agro Lestari (AALI) Tbk reported 15% surge in CPO output for June 2009 to 104,100 tons, but its first half 2009 output inched up by 1.1% only. 

Astra Agro in its July 2009 Investor Bulletin wrote that June 2009 output is significantly higher than June 2008 by 23%. For the first six months, total CPO output is 499,444 tons, increased 1.1% from the same period last year. Palm kernel oil (PKO) output increased 2% in the same period.

Indonesia is the largest CPO producer in the world. Malaysia's output in the period of January-May 2009 declined 3.9% and is projected to reach 17.8 million tons this year, inched up slightly by 0.6%. Malaysia is the second largest producer with about 39.6% of world production.

CPO futures contracts in Malaysia Derivative Exchanges dropped to RM2002 per ton on Wednesday. The price is 30% above the bottom in December 2008 and about 30% below the recent peaks (May 2009). This morning, CPO futures pointed to lower opening with bids for October-December contracts as low as RM1806 per ton.

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CPO falls 3 percent

The benchmark September contracts for CPO in Malaysia Derivatives Exchange dropped as much as RM80 or 3% to RM1989 per ton this morning. 

The current price is far below May 2009 average at RM2833 per ton, and even lower than March 2009 average of RM2015 per ton. CPO futures mainly tracked the downfall of crude oil prices to below US$63 per barrel.

Plantation stocks listed in Singapore Stock Exchange (SGX), mainly with operations in Indonesia and Malaysia, slashed significantly. Indofood Agri Resources, for example, lost 8.7%, while Golden Agri Resources slashed 6.4%, First Resources -4.6%, and Kencana Agri -6%. KL Kepong also lost ground with 1.7% drop.

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Palm Oil drops further

Crude Palm Oil (CPO) futures contracts in Malaysia Derivatives Exchange lost ground this morning and touched RM2101 per ton for the benchmark September delivery. 

CPO futures contracts closed lower at RM2129 per ton on Monday to tracking the downfall of crude oil prices. This morning's price is 25% below the May average of RM2833 per ton. CPO futures have actually recovered sharply this year. It surged 82% from the bottom average of RM1555 per ton in December to RM2833 in May, but since then dropped to RM2544 last month, and below RM2200 this month, so far.

In Indonesia, physical auction of 10,500 tons of CPO by KPB PTPN on Monday closed in the price range of Rp6215 and Rp6547 per Kg. Astra Agro's CPO auction closed in the Rp6265-6555 per Kg on Monday, dropped significantly from Rp8755-8855 per Kg in early May 2009. 

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