In October 2024, most of the plantation companies which deal with major crops such as tea, rubber and palm witnessed price gains driven by major global and local factors.
“We believe that the global price factors affected the share price movements,” said First Capital in its ‘What’s Behind the Sudden Price Increase in Plantation Sector Stocks? to Equity’ report.
Rubber prices at the Colombo Rubber Auctions increased in September, 2024, following the upward trend in global rubber prices, as reported by the World Bank. However, at the most recent auction in October 2024, prices recorded a slight decline indicating a possible peaking of prices.
Tea production in September 2024 recorded the highest compared to the last seven-year; September tea production. Tea auction prices remained stable during September and October 2024, but significantly declined on a YoY basis.
Revenue from tea is expected to increase while production rises, with auction prices remaining relatively stable. According to the World Bank reports, in line with the global rubber prices, rubber prices at the Colombo auctions rose in September 2024. However, at the last rubber auction in October 2024 prices declined slightly.
Global palm oil prices are trending upwards, primarily due to lower production from major producers. The increase in global palm oil prices is expected to impact Sri Lankan palm oil prices, leading to a rise in local prices as well. As crude and soybean oil prices increase, biodiesel becomes a more economically viable alternative fuel, boosting demand for palm oil. Reduced palm output from key producers and an ample supply of alternatives are expected in the future.
