CPO could rise further

On March 23rd, CPO prices broke above its January high of about RM2070. In January this year, CPO prices surpassed its previous high of RM1780 (achieved in November 2008) and gained about RM300 to hit a high of RM2070. Since the present breakout, CPO prices had gained about RM100. CPO April futures closed at RM2166 yesterday. See the 2-in-1 chart below (combining an earlier chart ended January 22, 2009 & another ended April 1, 2009).


Chart 1: CPO's daily chart as at Jan 22, 2009 & Apr 1, 2009 (source: ifs.marketcenter.com)

The Plantation index, which had responded very positively to the January breakout in CPO prices, seems to be very subdued to the present bullish breakout. I believe it will do a quick catch-up soon.

Chart 2: Plantation's daily chart as at 4/1/2009 (Source: Quickcharts)

Based on the above, I believe we should accumulate (or increase) position in the Plantation sector. My preferred stocks are IOI, KLK, Asiatic & Sime.