Commodities set for another bumper year

  • Business
  • Friday, 29 Dec 2006

PETALING JAYA: The year 2007 promises to be another fantastic one for commodities such as crude palm oil (CPO), tin, rubber and timber, the prices of which have been riding high on the global commodities boom. 

Commodity experts are pegging the price of CPO at above RM2,000 a tonne, tin at US$12,000 per tonne and rubber tyre-grade SMR 20 at above RM6.50 a kilo in anticipation of overwhelming global demand and constraints in supply next year. 

Industry observers and analysts contacted by StarBiz concurred that 2006 had been an action-packed year for local commodities, especially the plantation sector, which saw some high-profile mergers and acquisitions (M&As) that would create oil palm giants with a strong global presence. 

The star performer CPO futures contract for February is currently trading at RM2,040 – the highest in almost three years. 

The price of tin reached an all-time high of US$11,600 per tonne on the Kuala Lumpur Tin Market yesterday, mainly due to worries over tight supply as Indonesia, the world's biggest tin producer, clamped down on illegal tin mining operations. 

In mid-June, tyre-grade SMR 20 rubber breached RM8 per kilo, the highest in 20 years, before stabilising at RM6.345 currently. 

Timber, particularly logs and plywood, also had their fair share of price run-ups this year. Plywood prices were set remain high on strong demand from Japan, China and India, the International Timber Trade Organisation (ITTO) said in its latest newsletter. 

The Meranti and kapur logs are above the pre-1997 Asian crisis levels, hitting 13- and 10-year highs respectively. The dark red meranti sawnwood is also at an all-time peak in US dollar in terms since the ITTO started tracking this product in 1998. 

A plantation player said: “It will be an entirely different game among the plantation players next year with the potential de-listing of plantation giants Sime Darby Bhd, Kumpulan Guthrie Bhd, Golden Hope Plantations Bhd (GHope) and PPB Oil Palms Bhd from Bursa Malaysia.” 

He said the consolidation in the local plantation sector reflected a strong need for global positioning and a wide marketing network to stay ahead in the highly competitive and borderless market. 

Last month, Synergy Drive Sdn Bhd proposed to acquire Sime Darby, GHope and Guthrie to merge the three companies into the world's largest listed oil palm player with a combined market capitalisation of RM31.4bil. 

Two weeks later, Singapore-based Wilmar International Ltd made a proposal to acquire the Kuok Group's edible, refined oils and grains assets, PPB Oil – a unit of PPB Group Bhd – as well as PGEO Sdn Bhd and Kouk Oils & Grains Pte Ltd, in a RM15.5bil deal to create an enlarged Wilmar, which would become Asia's top agrobusiness group and the second largest oil palm group after Synergy Drive. 

Early this month, IOI Corp Bhd offered to acquire Pan Century Group's edible oils and oleochemicals units for RM423mil to further strengthen its downstream activities.  

Related Stories:Oil price likely to be less volatile next year 

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