Published On: Wed, Oct 5th, 2016

Positive outlook for Nigeria palm oil industry

palm-oilLAGOS, (CAJ News) – ANALYSTS are upbeat at the prospects of the Nigerian palm oil sector.

First Bank of Nigeria (FBN) said with a supply gap of about 500 000 metric tonnes (mt) and fertile arable land for cultivation, the untapped potential of the sector is large.

The main producers, Okomu Oil and Presco, have continued to increase their plantation area and are on course to meet their 2018 and 2020 targets of growing their respective land area to 12 000 hectares (ha) and 20 000 ha.

In 2015, mature land constituted about 95 percent of the total land area for both producers combined, growing by 10,8 percent for Okomu and 46,2 percent for Presco.

Total crude palm oil (CPO) produced during the year increased by 12 percent to 35 600 tonnes (te) and 10 percent to 39,328 te for both  companies respectively.

“We expect both companies to surpass their targets by 2017,” FBN analysts Kingston Nwosu and Jumoke Okeowo, stated.

The analysts noted the support by recent government policy partly explains why Okomu and Presco recorded healthy growth in sales in the first half of 2016.

They noted the palm oil sector was outperforming the broader market.

Having gained an average of 27,1 percent in 2015, against a market decline  of 17 percent, the palm oil companies outperformed the index year-to-date.

“From current levels, we see potential upside of 5,6 percent on average for both companies,” said FBN.

Nigeria is the third-largest producer of palm oil, palm, an edible vegetable oil derived from the pulp of the fruit of the oil palms.

CAJ News

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