Okomu Oil Palm Falls to 3-Month Low as Prices Drop: Lagos MoverEmele Onu
Okomu Oil Palm Plc, a Nigerian processor of the commodity, fell to the lowest since June 25 as global prices retreated, prompting concern that the company’s earnings will drop, according to Asset & Resource Management Co.
The shares declined for a third day, the longest stretch of losses in more than three months, retreating 5 percent to 41.53 naira by the close in Lagos, Nigeria’s commercial capital. About 1.7 million shares were traded, equal to more than 1.9 times the three-month daily average.
Palm oil prices fell 5.3 percent this year and the December delivery contract traded 0.4 percent lower at 2,302 ringgit ($720) a metric ton on the Bursa Malaysia Derivatives. Okomu Oil’s first-half profit declined 52 percent to 1.4 billion naira ($8.65 million), the company said July 23.
“Investors are selling the stock on concern global oversupply and weaker demand for palm oil will further weaken the company’s income,” Wale Okunrinboye, an analyst at Lagos-based Asset & Resource Management, said by phone. Full-year revenue may drop to 8.4 billion naira from 10.1 billion naira in 2010, he said.
Chibuzo Audu, the company secretary, didn’t immediately return an e-mailed request for comment.
The lower global price is prompting importers to boost their business, eroding the pricing power of local producers, Okunrinboye said. Okomu Oil’s relative-strength index fell to 28.9 today, below the 30 level that indicates to technical traders a stock may be oversold.
Okomu’s shares jumped 95 percent this year, compared with a 33 percent increase in the Nigerian Stock Exchange’s All-Share Index.