Wilmar share price in explosive meltdown

LIFETIME MEMBERSHIP What a disaster for Wilmar share price. The wheel finally came off the wagon when Wilmar share price hit a 5-year high of $5.60 on 19 February 2021. Wilmar share price began to nose dive after crude palm oil (CPO) prices peaked at a record high of RM$4,400 per tonne in April 2021.

As of 17 June 2021, CPO price has plunged to a low of RM$3,377 per tonne. In view of this, there is further room for the correction of Wilmar share price. For sure, the train wreck of Wilmar share price caught many investors by surprise. Should investors run for their lives?

Wilmar share price

Wilmar is one of the largest oil palm plantation owners in Indonesia and Malaysia. As such, Wilmar share price is prone to the volatility of CPO prices. One of the driving factors for the surging CPO prices in 2021 is due to the huge demand for palm oil by India. In fact, palm oil exports from Malaysia to India rocketed 766% year-on-year from January to May 2021. However, due to the second COVID-19 wave in India, palm oil demand is expected to decline sharply in the coming months due to the lockdowns in the South Asia country.

It is still early to assess the impact of the demand destruction of India. Nonetheless, the drop in CPO prices would have been worse if not for the Malaysia’s lockdown, which caused a severe labour shortage among plantation owners. The labour shortage led to lower palm oil production, thereby mitigating the fall in the demand side of the house. Against this backdrop, what is the outlook for Wilmar share price in 2021?

In 2020, I invested in Wilmar and exited at a profit of $2,700 in early 2021. My lowest entry for Wilmar share price was $4.84 and I exited at $5.20. While I did not exit at the highest point of $5.60, I have no regrets selling my Wilmar stocks. In life, you can never sell at the highest price. I am happy as long as I made decent profits. Although I have exited this counter, I am still bullish about Wilmar share price in the long-run because of the business strategies undertaken by the management.

Wilmar share price on the brink

Wilmar share price turned bullish with surging CPO

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. As of now, I am not vested in this counter. In view of the volatility of Wilmar share price, investors must exercise caution in trading this counter.

Wilmar share price faces turbulence

The long-term narrative for Wilmar share price is still positive as the Group continues its transformation journey to become a leading integrated agribusiness company. Nevertheless, in the short-term, Wilmar share price could be volatile due to the impact of COVID-19. Due to the fact that Wilmar’s core business is in the commodity business, the evolving pandemic will cause the financial result to fluctuate.

Indeed, the Delta variant threw a spanner in the works as 2021 is widely seen as the year of global economy. The Delta variant strikes at the core palm oil market of Wilmar – India, which is currently being ravaged by the second COVID-19 infection wave. To make matters worse, the Group has a 50:50 joint venture in India, Adani Wilmar. It is unknown whether Adani Wilmar’s business had been adversely affected by the pandemic in India. This uncertainty is likely to weigh on Wilmar share price performance in the near term.

In FY2020, Adani Wilmar racked in US$4.5 billion of revenue and US$93 million of profit. Given the strategic nature of Adani Wilmar, many investors speculated [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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