Steady growth in the palm oil market should boost the eight agricultural product firms listed here, after what has been a lacklustre year.
The companies, which have a combined market capitalisation of $29 billion, have performed poorly over the past 10 months.
Share prices are down 13.7 per cent on average in the year to date, according to the Singapore Exchange (SGX) yesterday, compared with a 16.7 per cent gain last year.
The shares have mirrored palm oil prices, which are down 17.6 per cent in the year so far.
Global Palm Resources Holdings, which has shot up 15.4 per cent in the year to date, is the best-performing stock in the sector.
The global palm oil market is forecast to grow at a compounded annual rate of 7.2 per cent between last year and 2021, reaching a market value of US$92.8 billion (S$125 billion) in 2021 from US$65.7 billion in 2015, according to a report from Zion Market Research last month.
It cited growth drivers such as improving economic conditions, higher living standards and changing eating habits in emerging countries, as well as increased demand for vegetable oil as a feedstock for biodiesel production.
Expected compounded annual growth rate of the global palm oil market between last year and 2021, according to a report from Zion Market Research.
The research firm added that the low price of palm oil, as well as stringent regulations on trans-fat foods in the United States and Europe, have spurred consumers to switch to palm from soya bean and other vegetable oils.
Palm oil prices for the rest of this year are projected to remain firm, given the seasonally strong fourth quarter, said Bloomberg Intelligence.
A further boost could come from weaker-than-expected output, and an anticipated cut in Europe's import tariffs for Indonesia's biodiesel.
The SGX classifies agricultural products under consumer staples, a defensive sector: "This year, defensive sectors have underperformed, as funds rotated out of defensives into cyclical stocks."
Wilmar International, the world's largest processor and seller of palm and lauric oils, reported a 5.7 per cent year-on-year decline in net profit to US$37 million for the three months to Sept 30.
The better performance in oilseeds and grains, and strong contributions from associates were offset by weaker results in its tropical oils and sugar businesses.
Revenue edged 0.4 per cent higher to US$11.1 billion, supported by increased sales from oilseeds and grains.