The drought is finally over for struggling palm oil planters

It’s reaping time for agri players.

Listed agribusiness players are headed rebound in 2016, on back of an expected surge in crude palm oil prices.

According to a report by Macquarie, CPO prices will surge on back of slower production growth driven by this year’s El Nino, which will produce a moisture deficit, and Southeast Asian haze, which will produce a sunlight deficit.

“The narrative for CPO planters will be better in 2016 than it has been in many years as the complex is set to tighten. We see next year’s average CPO prices 18% higher than the 2015 average, and 30% higher than the 4Q15 average. We think the Singapore listed planters are the best plays,” Macquarie said.

“We like the plantation sector for 2016 as it has a fundamental tailwind in the form of rising CPO prices. First Resources is our top pick. While it is less sensitive to CPO prices than most upstream peers, we like the relative predictability of its high production growth and high margin business model. We also like Indofood Agri, the cheapest upstream name in the group. Golden Agri is less favoured given its patchy results track record,” Macquarie said.

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