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Jakarta Post

Special Report: Plantations struggle as CPO prices in free fall

  • Manggi Habir

    The Jakarta Post

Jakarta   /   Fri, November 14 2008   /  11:03 am

Plantation companies are one of the first to suffer from the deepening global downturn. And, as the year end nears, it is plantations with scale of production, the right mix of tree maturity and a conservative balance sheet (low debt and high cash levels), that are best able to weather the storm. It was only a few months back, that the sector's outlook still looked so bright. Crude palm oil (CPO) prices were on an unprecedented upward climb. Fueled by high economic growth in India and China CPO prices soared to reach a peak of US$1,200 per ton by mid-year, about double its historical prices in the $350 to $600 per ton range. Reflecting this trend, the share price of Indonesia's three top listed plantation companies, PT Astra Agro Lestari (AALI), PT Bakrie Sumatera Plantations (UNSP) and PT London Sumatera (LSIP) also doubled in 2007, reaching respective peaks of Rp 28,00...