Linked In
News In
Linked In

You are viewing 1 of your 2 complimentary articles.

Register now to receive full access.

Already registered?

Login | Join us now

Palm plantation deal highlights Malaysian land premium

Twitter Linkedin

A palm oil plantation deal has highlighted the growing premium in land prices in Malaysia, the second biggest producer of the vegetable oil, to those in top-ranked Indonesia.

Felda Global Ventures, Malaysia's third largest palm oil producer, on Monday announced that it had acquired a number of palm businesses from Golden Land Berhad, another listed producer of the vegetable oil.

The $173.9m deal included 8,478 hectares of oil palm plantations, as well as associated processing and marketing businesses.

One parcel of 836 hectares of mature palm land was sold for $1.9m, or more than $22,744 a hectare.

That is even more than the average for Malaysian palm oil land, of about $19,000 per hectare, according to Edward Hugo of VSA Capital.

In Indonesia, land average about $16,500 a hectare, he said.

Property edges out plantations

Mr Hugo notes that palm oil production is increasingly being squeezed by rising land demand in Malaysia.

"Property is more valuable per hectare than palm oil plantations," he said, adding that it was "increasingly hard to get new plantations of the ground In terms of land available".

"Anything mature that comes up for sale is bought up very quickly," said Mr Hugo.

In fact, palm oil giant MP Evans have already stated a strategy of selling off all Malaysian land holdings, in order to reinvest in Indonesian plantations.

Indonesia to follow Malaysia trends

But Mr Hugo noted that similar dynamics were starting to take hold in Indonesia, as regulation, and a general trend to sustainability, prevents the clearing of virgin forest for oil palm plantations,

Mr Hugo said that growers were increasingly looking to Africa and the Philippines to grow their plantation portfolios.

Felda Global Ventures said on Monday that it has been "aggressively expanding its landbank size" while seeding to improve the ratio of mature plants in its portfolio.

"FGV will continue its efforts in land bank expansion and operational improvement, in order to drive towards its overall strategic priorities," the company said.

The latest acquisition was "consistent with" its business plan, and "improve FGV's age profile of oil palms", the group added.

FGV shares closed down 0.5% at 1.91 ringgit in Kuala Lumpur. Shares in Golden Land, which ended the last session at a 21-year closing high of 1.91 ringgit, were off market.


Twitter Linkedin
Related Stories

Evening markets: South American double whammy brings ags back down to earth

Ags lose early gains, undermined by a tumble in Brazil’s real, and falling rain in Argentina. Still, wheat futures remain in positive territory

Wheat leads respectable week for US crop exports

Sales of hard wheat - spring and winter - prove particularly strong. Cotton export data return to type - ie with strong sales but...

Can cotton prices extend their rally?

History suggests futures will not stay long in the 70s cents a pound. So which way will they trend?

Morning markets: Hard wheat regains premium over soft, amid US dryness worries

Kansas City wheat outperforms, as Plains precipitation worries extend to a dearth of snow cover. But Kuala Lumpur palm oil hits a 16-month low
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of the Briefing Media group
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069