(MENAFN- ProactiveInvestors)Reduced palm oil supplies should be a boost for DekelOil (LON;DKL) the operator and 51% owner of the Ayenouan palm oil project in Côte d'Ivoire according to Cantor Fitzgerald. 'Slowing oil palm plantation in the Far East makes Côte d'Ivoire particularly attractive as the market looks elsewhere for production.' Malaysia and Indonesia which account for some 85% of the world's global palm oil are struggling. 'The opportunity for further expansion in these countries has been constrained by a number of factors most pertinently a reduction in the amount of land available for planting' Cantor said. There is no such problem for Dekel according to the broker which is planning a second mill and further plantations. And while the Dekel is comfortable at the current prices the broker sees crude palm oil prices potentially rising next year. 'Crude palm oil price weakness this year may give way to market tightening in the near term as El Nino related weather slows global production in 2016 while production in Malaysia and Indonesia slows' Cantor said. 'Even at current prices DekelOil's new mill is profitable and will grow earnings' through better yields and higher output the broker added. One short-term benefit will be the crushing plant which will operate from the fourth quarter. 'Further out we see continued yield improvements and more feedstock from company plantations continuing to grow earnings right through to 2020.' Cantor has initiated its coverage with a 'buy' recommendation and target price on the shares of 1.75p. Shares were flat at 1p today.
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