This morning, Noble Group announced that it bought a stake in an Indonesian company that will provide the former its first foray into the palm oil sector. Noble’s announcement comes on the back of recovering NYMEX crude and palm oil prices…
Gaining access into crude palm oil sector through acquisition
The Hong Kong-based commodities supplier backed by China’s sovereign wealth fund CIC, said it bought a stake in PT Henrison Inti Persada to gain access to the palm oil market.
Noble acquired a 51 percent share in the company that “intends to develop” 32,500 hectares of land for palm oil production in Indonesia’s West Papua province, Noble said in a statement to the Singapore stock exchange this morning, without stating the value of the deal.
The transaction is Noble’s first project in the palm oil industry and allows the commodities supplier “to expand and increase its investments in this area in the future.”
According to Chairman Richard Elman, “this move into palm oil plantations will complement our global agriculture and energy businesses. Our operating experience in Indonesia should prove to be an asset in helping us manage this and future projects.” He added that “with increasing convergence between agriculture and energy, this investment is a clean fit for the Group’s diversified portfolio.”
Macquarie Research Equities has an Outperform rating on Noble Group with a 12-month target price of $2.50.
Crude palm oil sees best gain in three weeks
Noble’s announcement comes on the back of recovering crude oil as well as palm oil prices. August crude palm oil futures yesterday rose for the first time in six days amid concern the Argentine supply of soybeans and soybean oil may be affected by a port strike. It added 1% to 2,410 ringgit a ton on the Malaysia Derivatives Exchange, snapping a five-day drop of 3.6 percent and also rebounding from a 12-month low of 2,386 recorded on Friday. The gain was the most since May 20.
In the meanwhile, NYMEX crude oil prices also saw a bounce back above the US$75 mark. It rallied 1.8% overnight to close at US$75.12. It continued to advance 0.1% to US$75.18 as of 8.53 a.m Singapore time.
Crude palm oil prices tend to correlate with crude oil prices.
ML's Take:
Technically, counter seems to be attempting a breakout. However, resistance seen at 1.86 for now.
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