How Singapore's agribusiness players will be impacted by rising CPO prices

Average price jumped 5% in June.

According to CIMB, the average CPO price in June 2013 improved by 5% mom to RM2,386 per tonne, reflecting the tighter palm oil stock conditions and improved exports in the month.

However, CPO price was unable to convincingly breach the RM2,400 level due to the expectation of stronger palm oil supplies in September and larger soybean harvests from the US and South America.

"We maintain our Neutral stance on the sector and remain selective in our stock picks. Our top picks are First Resources, Wilmar and IOI Corporation. We like First Resources for its well-managed estates and attractive valuations.

Wilmar remains one of our top picks as we expect the group's earnings to benefit from higher palm oil sales volumes and improved crush margins.

We also like IOI Corp in Malaysia as we think that investors have not fully priced-in the potential of its property business, which will be demerged and listed separately in 4Q13," said CIMB.

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We maintain our view that CPO prices will see a correction when palm oil stocks increase in the seasonal peak production period that starts in September, and higher soybean oil supplies from South America become more widely available on the export market.