CSFB: 3 mar Palm Oil (Overweight)

> Palm oil May futures touched a record RM4,000 on 29 Feb 2008 but retreated
> to close at RM3,850 per tonne. We continue to be positive on palm oil.
> Nevertheless, there is growing risk of a short-term technical correction
> as speculators have pushed up the palm oil futures to record prices of
> close to RM3,900 from RM2,900 over a period of 12 weeks. Should there be a
> correction, any sharp weakening would be an opportunity to accumulate palm
> oil stocks.
> The recent global palm oil conference in Kuala Lumpur concluded with mixed
> messages. Speakers highlighted the risk of record prices crimping demand
> from food and fuel sectors. Biodiesel capacities are loss-making without
> subsidies, and most are operating at less than 20% capacity utilization.
> While Dorab remains a bull, saying that inventories cannot be replenished
> as demand will match supply in 2008, James believed that the latest cycle
> is no different from previous cycles and therefore, palm oil prices will
> pull back sharply very soon.