Last checked at (Sharecast News) - West Africa-focussed agriculture company Dekel Agri-Vision updated the market on its production for the wholly-owned palm oil project at Ayenouan in Côte d'Ivoire for October on Tuesday, reporting that crude palm oil production and sales prices increased 19% and 28% year-on-year, respectively, to 1,818 tonnes and €636 per tonne.
The AIM-traded firm said the numbers built on its "strong" third quarter performance and as a result, kept it on track to post a material second-half improvement compared to the second half of 2019.
It reported a 15% increase in fresh fruit bunches delivered to the mill for processing year-on-year, as well as higher extraction rates than in October last year, due to higher oil content in the fresh fruit bunches.
Lower levels of kernel purchases from other mills in the area were also reported, which was in response to weak pricing and resulted in lower palm kernel oil and palm kernel cake production in October.
On the sales front, Dekel said the strong pricing and sales performance in the month were the result of restocking by key buying nations in Asia such as China post-Covid-19 lockdowns, and low levels of stock in major producing countries such as Malaysia, which was now entering its low season.
Local palm kernel oil prices had been weak, the board said, reflecting low international prices, although the international price had increased over 25% in recent weeks.
Current international palm kernel oil prices were trading at about $1,000 per tonne, which should also start to flow through to local prices in the coming months, Dekel said.
Palm kernel oil sales of 251 tonnes exceeded production of 129 tonnes, due to collection of previously-sold oil that was being stored at Ayenouan.
"We remain on course to report a substantial uplift in the company's second half results compared to the second half of 2019 which, when combined with the stronger year-on-year first half performance, bodes well for our 2020 financial year numbers meeting market expectations," said executive director Lincoln Moore.
"International prices have continued to strengthen in the last few weeks as stock levels in the main producing countries remain tight and key buying countries such as China continue to restock following Covid-induced lockdowns.
"We are therefore cautiously optimistic that, despite the ongoing global pandemic, this highly supportive pricing environment will persist in the months ahead and, importantly, will provide supportive trading conditions during the upcoming peak harvest season in Cote d'Ivoire."
Moore said that typically running from mid-January to mid-June, 2021's peak palm fruit harvest season was expected to coincide with the start of operations at its second producing asset, the Tiebissou cashew processing project, in which it recently secured a controlling interest on what the directors believed to be "value-accretive" terms.
"We are entering a pivotal period in Dekel's development which will see the Company become a multi-project, multi-commodity agriculture company focused on West Africa and with this in mind, I look forward to providing further updates on our progress."
At 1609 GMT, shares in Dekel Agri-Vision were up 6.52% at 2.45p.
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