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Perhaps like parts of W.Africa low rainfall is impacting ffb's though I doubt it's the main reason for the drop from 208 in early April to current. That fall would include some hefty profit taking.
Should be an interesting day today with a rally of sorts in London. Hope it includes us!
Not sure why REA has been clobbered 24 since end of April but looks well oversold at that price. A late reported buy of 50,000 at 170 yesterday may steady the ship this morning.
London Palm Oil share prices at Wk18.
Ytd
------
Anglo (818) +15%
Dekel (4•85) +5%
Mpe (932) +16%
Rea (171) +22%
------
Cpo $1775 (+34%)
Anglo (854) +20%
Dekel (5•62) +18%
Mpe (944) +17%
Rea (175) +25%
Cif(R) ($1912) +31%
Cooking oils have doubled and olive oil is sky high as concerns over the flip flopping economic policy by the Indo Govt causes uncertainty in global mrkts. As of the 28th Indonesia will widen the export ban to include CPO. Palm olein is the most widely used cooking oil in the world and is now being purchase limited and price capped at ($0•93).
The export ban will last until domestic prices ease and is being used by the Govt as a form of crop protectionism.
As edible oil shortages increase globally, Govts are forced to protect their own food supplies.
Futures for July delivery surged by the 10% limit in KL and extended gains over night by a further 2%. London Palm Co share prices closed mixed on Thursday, Anglo up 7, Mpe off 25 & Rea added 3.
Big jump of $202 (CifR) to $1912.
Anglo +16%
Mpe +24%
Rea +27%
Ytd range.
Anglo 554-930 (825)
Mpe 670-1090 (995)
Rea 48-208 (178)
Indonesia's palm oil export ban is expected to last around 4 weeks due to lack of storage space for surplus oil and increased pressures from buyers to resume shipments.
Typically producers and processors produce twice as much as is consumed domestically. Once tanks are full mills are not able to process the ffbs and the fruit will rot and production drops.
Indonesia holds around 5m tonnes of oil stock out of a capacity of between 7-7mt with an annual domestic usage of c.18mt out of a total 51mt produced.
Banning cpo exports will certainly hurt producers. According to a leading palm oil farmers union expert said it could destroy the lucrative industry. While others say it was a necessary step for wider reform of the industry to devolve control from a handful of conglomerates to small farmers.
Whatever one thing is certain the poorest will be facing higher food costs through rising inflation and 'lay offs' on estates will add to unemployment. London palm shares have taken a beating, REA off 15% this week in response to the global uncertainty of output and prices.
April 28th will see Indonesia's clampdown come into effect prohibiting exports of palm oil as the country prioritises the domestic mrkt following protests over high food prices.
However their is much scepticism among traders that the ban will hold as it seems the ban will extend to bulk purchases and packaged RDB palm olein only.
Meanwhile the Indonesian Central Bank cuts growth forecasts but holds rates at 3•5%. Cif Rotterdam prices tumbled yesterday to $1665. UK shares of palm oil companies tumbled, MPE tanking 93, REA 9 but bucking the trend Anglo added 46.
Two late reported trades of 25k (190) and 40k (192) way above current sp skews current pricing. Along with cancelled trades its becoming a major bugbear for investors.
Won't be long before trades don't get reported at all and all trades will be conducted in private among high rollers with inevitable consequences for investors in the real time world.
Indonesia's ban on exports of palm oil from April 28th due to domestic shortages will hit India and other countries badly. The local price has soared from 14k rupiah to 22k rupiah as people stockpile oil.
The ban will mean India will lose c.4mt of palm oil every month coming at the worst possible time of rising costs and inflation. Indonesias supply is impossible to replace and its unlikely Malaysia will be able to fill in due to pandemic induced labour shortages.
Adding to woes palm oil futures soared to their highest level since March. Indos palm oil ban threatens stoking global food inflation. Current cif Rotterdam price $1785.
Yea, it's good and bad in parts and I expect the mrkt to take a dim view. Not sure about Ukraine planting next April but at least we're starting ext planting and need to get a hurry up as I agree the cpo price could come under pressure if China & India cut back. As ever things move at a slow pace but a return to profits is welcome
despite worries what our landlord plans to extract from us in biotaxes etc...Still a hold imo.
"A better looking set of nos reported by REA"
Yes, JL, but the tax charge is over 60%! Another negative eps figure again. A lot of it is fluffy stuff - intentions to do extension planting, expectation to sell a million tonnes of stone over 2 years, etc. All a bit disappointing. The high CPO prices will drop off next year when Ukraine plants a sunflower crop next April, I wonder? Coal prices can't possibly stay above $300 a tonne for long, surely? We need $24.3m to deal with the pref arrears and pref divs due this year, and that's to just stand still. JMV.
A better looking set of nos reported by REA in respect of 2021 trading, which has cont into Q1 (2022).
Revs $192m ($139m)
GP $62•1m
PBT $29•2m
NP $9•3m ($16m L)
Nav $246m
Nav £189m
Nav 430p
Group debt reduced to $176m
(£135m) equates to 307pps or 71% of shareholder funds.
Morning NB. For sure, nevertheless I still think I should have dug my heels in and not cashed in my chips....going for Gold hasn't worked out well atm and as usual find myself stuck in a 28% loser not to mention 100p losses on my REA trades. The grass is def no greener in WA.
Much to my surprise REA is outperforming AEP & MPE in ytd sp terms (not that it means much) and no way could I have forecast that. A touch at Donny has given me some ammo...now is it to be AEP or MPE. AEP don't seem that shareholder friendly and buying MPE on take-over hopes doesnt work for me as I'm not sure an offer of £12+ is on the cards so the upside may stall around current. I'm not bothered about dividends.
Of course I could add to REA or throw more money down a deep hole in WA.
Any views NB?
"Whatever the Co does the F/Y nos will be one of the more interesting REA has
reported for many a year..." Agreed.
Not stupid to sell out - nobody could have foreseen the huge rise in the price of CPO and coal, and nor could they have foreseen the Ukraine invasion and the anticipated disruption to sunflower oil production. The only clue maybe was a comment in one of the annual reports that CPO had been trading below its 10 year average for some time. ATB.
Hi nobull, yea a minefield forecasting REA nos given the scope to as you say..." being miles out"... I can't see REA paying off the pref arrears in one hit, not much point imo. If we get $1000 emg price would be better than I hoped for but REA have disappointed too many times in the past for my liking. However I'm turning a profit having stupidly sold out c.60-70 so must'nt moan too much and intend to hold for the foreseeable.
Whatever the Co does the F/Y nos will be one of the more interesting REA has
reported for many a year.....fingers crossed revs will hit c.$200m.
I wouldn't trust my own forecast in a million years on this stock: the combined leverage is so high that one small mistake in the revenue figure could leave the eps figure out by miles; also, the size of the pref div arrears chosen to be paid is a finance cost that reduces eps attrib to the ords, so you might have to guess right the amount of pref. arrears they will pay too, I wonder, to be anywhere near close to getting the eps attrib to the ords right.
One poster on RE.B thinks they might pay all £12.24m (72m x 17p) or $16m of arrears this year. With a $1700 CIF Rotterdam price, one would hope we were getting $1,000 ex-mill gate after the dreadful $375 Export Levy and $200 Export Tax and $100 imagined freight cost to Rotterdam, which would be higher than the average ex-mill gate price we got for FY2021, and yes, this high ex-mill gate price might make it possible to pay off all the pref. arrears at once, but I can't imagine they could turn a profit on the ords if they do that. Fingers crossed they are exploiting the high coal prices and have started to sell andesite.
Indonesian palm oil companies share prices have been given a boost due to problems with sourcing sun flower oil from Ukraine. Mpe has risen 150+ this last month with similar % rises seen in ultra cautious Anglo and REA.
REA reports F/Y nos towards end of April which will be materially better than a year ago after accounting of the usual (too much rain, roads damaged, fire damaged boiler), Covid, etc which is the cost of doing business in unpredictable weather stations. Reducing debt and settling some of the loans is ongoing while the stone and coal interests should start to make a contribution of sorts having done sfa for years.
I think nobull forecast an eps of c.8p for 2021 and I wouldn't disagree though i suspect he is being extremely cautious given the rise in cpo this year which could average out some $200 more than 2020. You never know the bottom line might turn blue, stranger things have happened.
Currently 83% of the outstanding is held by investors with over 4%.
Back in for a few shares pre F/Y results.
Shares went up too fast and we're due a pull back. No doubt the greedy Govt will be picking the pockets of overseas palm companies, so factor that into any purchase of REA. Whatever the results should be on the stellar side for a change!
https://www.spglobal.com/commodity-insights/en/market-insights/latest-news/agriculture/030122-malaysian-palm-oil-orders-surge-as-buyers-cover-for-shortfall-in-ukraine-sunflower-oil
Spot month palm oil futures above MR 8,000/mt for first time
Buyers stuck between stalled Ukraine cargoes, high palm oil prices
Market adjusting to new dynamics: analysts
Anxious Indian buyers, with no clarity on sunflower oil shipments out of Ukraine, are turning to crude palm oil from Malaysia to fulfill demand ahead of month-long Ramadan which starts in early April, industry sources told S&P Global Platts
"Panic at destinations specially at India about the supply chain is resulting in buyers looking to cover oil from every source and the asked price," Vivek Pathak, managing director of India-based trading house Athena Tradewinds, which deals predominantly in sunflower oil said in a Feb. 28 note.
Last month, 500,000 mt of sunflower oil was expected to leave Ukraine and the March line up so far is also around 450,000 mt, of which India buys roughly 250,000 mt each month, Pathak said.
Buyers are currently not placing new orders for Ukrainian sunflower oil as they have not been able to track their shipments since Russia invaded Ukraine on Feb. 24, sources said.
Ukraine accounts for 46% of the world's sunflower oil exports and the ongoing war represents a significant disruption to the global edible oils trade flows as the market was looking for an increase in sunflower oil exports from Ukraine to partially relieve the current tight supply in global edible oil markets, CGS-CIMB Research
Wigwammer you must be pleased at REAs new lease of life, well in sp value terms anyway. Of course the debt % to shareholder funds will still be high and was one of the reasons I decided to sell out. In hindsight that was a big, big mistake. I'm not entirely sure what has changed significantly for the sp to nearly triple since I sold apart from settling some of the longstanding debt and Robinow buying warrants (now in the money). Profits not usually associated with REA will be welcome and nobull makes pertinent points on our Coal interests and financial gearing effects. Crucial to further progress will be the CPO price into 2022 as I have seen estimates as low as $750. That looks a worst case scenario to me.
REA was in the dog house for several years while CPO nearly tripled
so who knows if CPO comes tumbling down the sp will remain steady....
Yea right! It's still a tightrope walk for me, but on the face of it a £60m cap is hardly representative of the asset base.
REA was my bigest holding at one time so selling out was not an easy decision. Unfortunately the greener grass 'goldie' I bght turned brown almost immediately and it's taken all my cash to get to break even. That's been a lose, lose for me. Anyways good to see the Co back on a profitable path. Now if only the debt could be sorted from 'ongoings' and i agree with nobull a multi bagger is on the cards.
My concern is I might have missed the boat, well a 100 pence worth for sure and unless my Goldie suddenly finds 1lbs nuggets I'm lumbered staring down a deep hole. I will cont to watch with interest and the May figures should prove well worth reading.
Gluck.
What I said before isn't quite right. There is a view that as CPO prices fall, the amount we get stays approximately constant because the export taxes and export levy reduce. To some extent that is true. But we are probably a high cost producer compared with AEP and MPE (no unit cost of production is published in our accounts, so it is more likely than not that we are a high cost producer - otherwise they would be trumpeting their low unit cost achievement, right?), which means we theoretically go out of business before other companies do when CPO prices drop to really low levels for long periods. We have the best CPO yield per mature hectare but that might be because we have fewer young oil palms and therefore an almost flat future production growth profile while the other companies have a more attractive, steeply rising one (e.g. MPE trades on higher price to book ratio than we do - we trade at a huge discount). Yes, the gains on the prefs are capped, so the prefs are a lower risk, lower reward play, whereas the ords are a higher risk, higher potential reward play.
Next news should be a coal shipment or disposal of the coal interests, and possibly a trading/production update. Yes, the prize here is to repay all the debt and redeem the prefs so that the near $500m of total assets mostly belong to the ords whose value is only about $50m at present - yes, some of the assets are financed by minority interests and yes, there is some dilution to come from the warrants being exercised when the share price is above £1.26, but were we able to buy out all that prior ranking finance using funds generated by ops, it is possible to see a multibagger here, but if it happens it will probably take quite a few years, but I am happy to wait! AIMO. DYOR.