PETALING JAYA: Planters in Indonesia can resume exporting their crude palm oil (CPO) and other derivatives, following the Indonesian government’s latest clarification that its export ban only affects palm olein or “cooking oil”.

       The republic’s export ban on the refined, bleached and deodorised (RBD) palm olein will take effect tomorrow.

       RHB Research in its latest report said there would be a few outcomes following this latest development in Indonesia.

       “The upstream planters there will be able to go back to either selling CPO domestically to refiners or exporting it. For downstream planters, they can either not refine their products and just export the CPO, or only produce RBD palm oil, which is still allowed to be exported,” said the research house.

       However, downstream planters that do not change their product mix could be at a disadvantage as “there will be a surplus of RBD palm olein in the domestic market.

       “Should they sell the palm olein to bulk cooking oil producers, they will be able to recover the price difference from the biodiesel fund.

       “But, if they sell the olein to the branded cooking oil market, prices may be negatively affected by the excess supply to the market,” explained RHB Research.

       For Indonesian planters, which have downstream capacities in Malaysia, the research house said these planters may also decide to export CPO to Malaysia to be refined or re-exported.

       Malaysian planters with downstream operations would also stand to benefit in terms of lesser competition from the previously lower-priced refined products from Indonesia.

       “Local planters can potentially get more CPO supply from Indonesia, which will likely result in higher utilisation rates for their refineries,” added the research house.

       RHB Research added: “Consequently, we think the recent selldown of several upstream Indonesian and Singaporean listed planters may be overdone, since CPO exports are allowed again.”

       With the decline in share prices of the Indonesian and Singaporean listed planters on Monday, it expects that there could be a bounce back.

       RHB Research is “neutral” on the plantation sector while advocating a trading strategy.

       “We see opportunities to buy on weakness for pure Indonesian planters on the back of this new development.”

       Its stock picks are pure planters in Malaysia such as Sarawak Oil Palms Bhd and Ta Ann Holdings Bhd.

       However, the research house said it would now switch to “buy” on weakness of Indonesian pure planters, namely Bumitama Agri Ltd and Perusahaan Perkebunan London Sumatra Indonesia Tbk PT.