KUALA LUMPUR: Maybank Investment Bank Research (Maybank IB) believes the 2019 Novel Coronavirus (Covid-19) may not have a significant impact on staple food demand like vegetable oils.
“In fact, there should be greater demand of basic food supplies like vegetable oils at the onset of the outbreak as fear will lead consumers to stock up on basic food essentials at home.
“While eating out may be limited, this likely be compensated by increased home cook meals,” the investment bank said in a note yesterday.
It believed consumers tend to be more generous in edible oil consumption when it comes to home-cook meals as they tend not to recycle cooking oils compared to restaurants.
Furthermore, the point of an outbreak should also increase the use of personal hygiene products such as hand wash, shower gels, soaps, mouth wash and shampoos which contains palm oil.
However, Maybank IB, which maintained a ‘neutral’ call on the regional plantations sector, said its bigger concern is whether this outbreak will be out of control.
“If that happens, we fear crude palm oil (CPO) price may be under more selling pressure than the actual demand for palm oil itself,” it said.
It is also concern on possible contract default or renegotiation of contract terms by the Chinese and Indian buyers, given that CPO price has been very volatile of late and has been trending downwards since the start of 2020. Maybank IB said the market opined that the Covid-19 resembles that of SARS-CoV in 2003 and not lethal but far more contagious as the reported numbers of cases and deaths are still rising by the day.
“If China’s unprecedented lockdown and quarantine measures prove ineffective, and this epidemic turns into a pandemic and extends beyond the summer months of the Northern Hemisphere, sentiment will likely turn more negative by then,” it explained. — Bernama