DJ MARKET TALK: Palm Oil Prices To Rise As US Floods Hit Crops - CS 0157 GMT [Dow Jones] Credit Suisse keeps Asian Palm Oil sector at Overweight as projects U.S. floods could translate into loss of 1.5% of U.S. corn crop, 3.3% of soy crop. Says would reduce corn inventories by 25%, cut soy inventories by 60% on absolute basis as inventories were already expected to be at multiyear lows. Adds, some climatologists believe U.S. summer could be hot and dry, marking a double negative whammy for crop yields.
Notes palm oil prices have lagged soy oil price surge, with soy's premium over palm at record US$306/tonne; says gap should narrow. "Should there be a further deterioration in the oilseed crop, all vegetable oil prices, including palm oil, will soar. We remain bullish on palm oil prices." Tips top sector picks as KL Kepong (2445.KU) and Indofood Agri (5JS.SG).
