KUALA LUMPUR: RHB Research remains "underweight" on the plantations sector as the Malaysian Palm Oil Council (MPOC) expects Indian demand for palm oil to moderate in 2022 given the prevailing high prices, higher domestic production and current import duties favouring soybean.

       According to RHB, the MPOC forecasts India's palm oil imports to be 5% lower in 2022 to 8.2 million tonnes.

       Meanwhile, the research firm continues to expect this year's fundamentals of supply to improve, with a moderation in CPO prices in 2H22, while valuations will remain dampened by ESG risks.

       Following its meeting with MPOC regional director Bhavan Shah, RHB reported that India's demand for palm oil has not reached pre-pandemic levels with year-to-date November 2021 imports of 13% below that of the same period in 2019.

       "Covid-19 continues to affect demand in the hotel, restaurant and cafe (Horeca) sector as India is currently undergoing a surge in cases due to Omicron.

       "While India is not in a full lockdown mode, there are restrictions in place in certain states in the red zones, including a ban on in-restaurant dining, 50% capacity workforce, and the shutdown of schools and gyms, amongst others," said RHB.

       Meanwhile, the Indian government has reduced import duties, imposed stock holding limits and suspended trading of future and options contracts on edible oils, oilseeds and agricultural products in an effort to reduce inflationary pressures.