Dekel Agri-Vision reports decent production as palm oil prices fall

(Sharecast News) - Dekel Agri-Vision said on Thursday that, during April, activities at Ayenouan - including fresh fruit bunches (FFB) purchasing, logistics and milling operations - continued with "relatively minimal" disruption.

The AIM-traded firm said that while at present, Côte d'Ivoire had not seen the levels of Covid-19 pandemic disruption as seen in Europe, it would continue to adhere to the advice and guidance of government authorities to help ensure the wellbeing of all its staff and the local communities in which it operates.

It reported a 9.6% increase in crude palm oil (CPO) production to 6,143 tonnes year-on-year in April, explaining that the strong performance followed a record March, which saw 6,314 tonnes of CPO produced, up from 6,178 tonnes a year earlier.

Dekel said there was also a "strong" improvement in its extraction rate to 23.1% in April, compared to 21.5% a year earlier, reflecting strong oil content in FFB.

High quality FFB and high kernel extraction rates also contributed to strong like-for-like palm kernel oil and palm kernel cake production, which increased 27.1% and 36.9%, respectively.

On the sales front, Dekel said 5,106 tonnes of CPO was sold at average prices of €577 per tonne in April, compared to 5,907 tonnes at €488 per tonne in the same month of 2019.

It said CPO demand in Cote d'Ivoire remained "relatively robust", compared to international markets.

Due to the five-week lag for local pricing to reflect moves in global benchmarks, CPO prices achieved in April were "materially higher" than current global prices.

Having traded as high as $870 per tonne on 13 January, global CPO prices had continued to move lower, the board reported, and currently traded at $530 per tonne.

It put that down to both lower demand for food products as a result of "extreme measures" globally to suppress the spread of Covid-19, and a sharp fall in crude oil prices, which adversely impacted demand for biofuel for which CPO is the primary feedstock.

"Operations at our palm oil project at Ayenouan have largely continued as normal during April despite the challenging trading conditions caused by Covid-19," said executive director Lincoln Moore.

"We view this as testament to the effort the team has made over the years to establish collaborative relationships with the local smallholders who deliver fruit to our mill for processing, and also the hard work we have put in to ensure that operations at Ayenouan are as efficient as possible.

"During this challenging period our focus will remain on maintaining stability, while at the same time endeavouring to provide shareholders with more regular production figures."

At 0932 BST, shares in Dekel Agri-Vision were down 8.64% at 2.01p.