Despite a 14% decrease in the value of palm oil since the beginning of 2023, positive signs are emerging with a recovery in prices, increased demand from India, and slightly reduced stocks. These positive factors predict better year-end results for Palm CI, but 2023 may mark its first stock value decline in three years.

The ongoing rise in palm oil prices on the global market presents a favorable situation for Palm CI, listed on the Regional Securities Exchange (BRVM) in Abidjan. At the end of Q3 2023, the company reported CFA172.8 billion ($288.7 million) in turnover, 9% down YoY.

"This decrease is the result of the drop in the price of crude palm oil, from CFA618,199 per ton to CFA597,377 per ton, as well as the 44% decrease in the price of palm kernel oil (according to global prices). The production of crude palm oil and palm kernel oil increased by 6% and 2%, respectively, between Q3 2022 and Q3 2023,” Palm CI explained.

Despite a 14% decrease in the value of this product since the start of 2023, indications from the market propose the potential continuity of the recent price recovery. Contrary to the usual winter trend favoring soybean oil, orders from India, one of the major importers, have reached a record high three months earlier.

This growing demand coincides with a decrease in stocks for the first time in seven months, according to market players cited by Reuters. Moreover, recent attacks on ships traversing the Red Sea may prolong transport distances, potentially increasing the cost of transporting this product from the main production hubs in Malaysia and Indonesia (representing 89% of global production).

The company is also grappling with rising wages due to regulations that increased the guaranteed interprofessional minimum wage (smig) and the rise in fertilizer prices. Investors are awaiting the publication of the company's fourth-quarter accounts for 2023.

Despite a dividend of CFA1,348, representing a 13% per-share yield in July 2023, the company's stock value has dropped by 35.2% since the beginning of the year. This marks its first value decline after three consecutive years of growth, including a record in 2021 (210.7%).

For long-standing investors who have been through several cycles of rising and falling palm oil prices, there is no need to panic just yet. To date, those who have held Palm CI shares for 5 years have generated a total return (dividends + stock market capital gains) of 378.4%. This is better than that of the agro sector on the BRVM and better than the market as a whole. On Tuesday, December 19, even though only 707 of its shares were traded, the 4.3% rise can be read as a sign of renewed investor interest.