, Singapore

Will Indonesia's palm oil moratorium injure SGX's agri giants?

Palm oil prices may tick up, says DBS.

Indonesia's plan to impose a moratorium on new palm oil concessions is expected to have minimal impact on Singapore-listed agribusiness players, according to a report by DBS.

DBS noted that most of Singapore's agri players have already adhered to sustainable planting practices, including High Carbon Stock and High Conservation Value studies prior to undertaking new planting.

However, DBS added that the planned moratorium may have a favorable effect on palm oil prices in the long term.

"We do not expect any immediate impact on global palm oil supply, as available and suitable land has long dwindled, causing new plantings to slow down since 2013. [However], there is an upside risk to palm oil prices if there is any large-scale replanting programme in Indonesia; as these would remove some palm oil supply from the market, as it takes newly planted oil palm tree four years to start bearing fruit," DBS said.
 

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