By Chester Tay

KUALA LUMPUR, Malaysia--Shares of Malaysian plantation companies extended a recent rally in Friday trading ahead of quarterly earnings releases, which should reflect the benefits reaped from elevated crude palm oil prices.

Sime Darby Plantation Bhd. rose 7.4%, and is on track to record a near 20% gain for this month alone, while Kuala Lumpur Kepong Bhd. climbed 5.5%, with month-to-date gains of 11%. Both companies are scheduled to release their quarterly earnings next week.

Among other plantation stocks, FGV Holdings Bhd. advanced 3.3% and IOI Corp. gained 1.0%.

The market appears to be pricing in supply risks for crude palm oil after official data showed that the country's end-January stock level was lower than expected at 1.55 million tons, after a 4% decline over the month due to higher exports, CGS-CIMB said. The brokerage expects this trend to persist, forecasting Malaysian palm oil inventory at end-February to be 5.3% lower compared with a month earlier.

January exports were higher than expected despite demand rationing by price-sensitive consumers, the brokerage said.

CGS-CIMB expects palm oil prices to remain firm due to tight near-term supply conditions and concerns over delayed palm oil export shipments from Indonesia after new export restrictions.

The brokerage raised its forecast for average crude palm oil price in 2022 to 4,100 ringgit ($980.04) a ton, from MYR3,600 previously, to reflect slower-than-expected resolution to foreign-worker shortages in Malaysia, new Indonesian export limits and concerns over lower soybean supply due to an ongoing drought in South America.


Write to Chester Tay at chester.tay@wsj.com


(END) Dow Jones Newswires

02-11-22 0317ET