SIPEF 
By 1.1. GROUP PRODUCTION
Group production | ||
* Beneficial Interest: share of the group |
The palm oil production of the group rose over the first nine
months by 9.1% versus the same period last year. The positive
trend recorded during the first semester at Agro Muko in the
province of Bengkulu in Indonesia (+18.5%) and at Hargy Oil
Palms in Papua New Guinea (+19.1%) continued during the third
quarter. Both projects enjoyed more favourable weather
conditions than last year as well as a higher degree of
maturity of the planted area. The expected recovery of the
volumes on the estates in North Sumatra was hampered by a
period of drought during the months of June and July
resulting in a production in that area that turned out 9.7%
lower than in the same period last year.
The good rubber production volumes of 2010 could not be
matched. Contrary to growing quantities in Agro Muko (+27.9%)
freakish wintering (loss of leaves) and lack of rain in the
third quarter kept the other projects, North Sumatra (-15%)
and South Sumatra (-27.7%), below expectations. The raw
rubber volumes in Papua New Guinea stayed on course, but a
modification to production procedures has slowed down the
output of made rubber (-20.1%).
The tea production in Java-Indonesia keeps suffering from
adverse weather conditions this year. After a long period of
lack of sunshine during the first five months of the year,
the third quarter turned out to be abnormally dry resulting
in a much lower growth of green leaf.
Also the production of bananas suffered from bad weather
conditions during the third quarter. Lower than normal
temperatures affected the yields and as a result the losses
following the political crisis could not be recovered.
Kasteel Calesberg - 2900 Schoten
RPR Antwerpen / BTW BE 0404 491 285 p. 1 of 3
1.2. MARKETS
Average market prices | ||
in USD/tonne* First 9 months 2011 First 9 months 2010 Palm oil CIF Rotterdam 1 159 831 Rubber RSS3 FOB Singapore 5 229 3 429 Tea FOB origin 2 962 2 844 Bananas FOT Europe 1 177 992 * World Commodity Price Data |
Weather conditions in the US hampered the development of the
oilseed crops, whereas good conditions around the Black Sea
boosted the sunflower seed crops in that area. Current stocks
of oilseeds and palm oil are higher than last year and this
put some pressure on prices. We saw levels ease slightly
during July and August. However the drop was tempered by
expectations that lower growth in palm oil next year and
growing demand for biodiesel would support vegetable oil
prices. Nevertheless all markets, including commodities,
suffered losses in the second half of September when
operators perceived there was a lack of political decisive
answers to the growing euro crisis.
In general industrial activity was slow during the summer
period and this affected the rubber market where we saw
prices ease marginally. However the aversion to risk, that
got triggered by the growing worries that no quick solution
would be found to the euro crisis, led operators to liquidate
long positions on the rubber futures markets, dragging down
the price of physical rubber stocks.
Tea prices, not subject to futures markets, remained rather
mixed during the third quarter. Demand for good quality teas
is offsetting the pressure from growing production of lower
quality teas.
Notwithstanding lower availabilities of bananas from all
origins prices did not move up during summer, traditionally
the low period of consumption. The reopening of schools in
Europe together with special promotion campaigns during
September did give a boost to the market towards the end of
the quarter.
1.3. PROSPECTS
We expect the current production trends of the first nine
months to continue, resulting in a marginally higher
production of palm oil and lower production of rubber, tea
and bananas than last year.
Based on supply & demand fundamentals alone the vegetable
oils market looks set to move back up from current lows.
Slower growth in palm oil next year, lack of moisture in
South America's soybean crop areas and growing demand for
biodiesel should give good support to prices. Today however
the markets are totally overshadowed by the woes of the
financial crisis and a lack of credible solutions. So fear
that the world may slip back into a second recession
dominates the markets and outweighs the bullish fundamental
factors. This is the case for palm oil and rubber.
Tea prices should remain in a narrow range as world tea
production does not show signs of picking up.
Kasteel Calesberg - 2900 Schoten
RPR Antwerpen / BTW BE 0404 491 285 p. 2 of 3
The yearly sales contracts for bananas safeguarded us against
the volatility of the market during the summer and we look
forward to a period of higher consumption during the winter.
Our production, quality and productivity are meantime fully
geared to our objectives for a more dynamic trade at year end
and at the start of next year.
Notwithstanding an easing of sales prices for palm oil and
rubber during the last months, our profit expectations for
2011 remain intact. Taking into account the production
volumes and knowing that practically the whole expected
production of palm oil and rubber has been sold respectively
at an average of USD 1 145 per tonne CIF Rotterdam and USD 4
487 per tonne FOB, we are moving towards a recurrent result
that should exceed that of 2010. This is in spite of the
uncertainties regarding the Indonesian export tax and the
evolution of local currencies that have an effect on our cost
of production in USD.
The announced expansion of our activities continues. After a
somewhat slow start the expansion in Papua New Guinea has now
reached cruising speed and we should exceed 1 000 hectares of
new plantings by the end of the year. The files for new
projects in South Sumatra are progressing according to
expectations. After a first license for the planting of 10
500 hectares was obtained on July 18, work is done to survey
the land and to set up a nursery so that at the beginning of
next year we can start with the first planting. The
procedures to obtain the remaining two licenses in the same
area are going as planned and we remain optimistic as to
receiving both before year end.
Schoten, 27 October, 2011.
For more information, please contact:
* F. Van Hoydonck, Managing Director (mobile
+32/478.92.92.82)
* J. Nelis, Chief Financial Officer
Tel.: 0032/3.641.97.00 Fax: 0032/3.646.57.05
mail to : finance@sipef.comwebsite www.sipef.com(section "investor relations")
SA SIPEF NV is a Belgian agro-industrial company listed on
NYSE Euronext Brussels.
The company mainly holds majority stakes in tropical
businesses, which it manages and operates. The group is
geographically diversified, and produces a number of
different commodities, principally palm oil. Its investments
are largely ventures in developing countries.
Kasteel Calesberg - 2900 Schoten
RPR Antwerpen / BTW BE 0404 491 285 p. 3 of 3
