Dekel reports strong period for palm oil operation

West African agriculture company Dekel Agri-Vision said in an update on Wednesday that its palm oil operation saw another strong financial performance in the first half, driven by robust production levels and historically high crude palm oil (CPO) prices.

The AIM-traded firm said that despite a slight decline compared to the first six months of 2023, with fresh fruit bunch (FFB) volumes and CPO production decreasing by 8.1% and 7.7% respectively, the operation remained stable.

CPO sales quantities increased 7.7% year-on-year, primarily due to higher stock levels from a delayed high season in the first half of 2023.

The average CPO sales price for the first half of 2024 was €770 per tonne, a 17.6% decrease from 2023.

However, international CPO prices had remained steady at around €900 per tonne, with local prices gradually aligning, reaching €773 per tonne in June 2023.

The CPO extraction rate for the period improved slightly to 22%, with recent monthly rates exceeding 23%, indicating positive prospects for the second half of 2024.

Dekel said its cashew operation meanwhile continued its conservative approach as the company awaited the commissioning of new shelling and peeling equipment.

Ordered in January, the new equipment deliveries began arriving last week, with the remaining shipments expected by September.

Commissioning of the new equipment, overseen by a “highly credentialed” cashew processing consultant, was set to begin in the coming weeks.

Dekel said it anticipated an improvement in cashew production volumes and quality by late the third quarter of 2024.

Additionally, there had been a significant increase in whole cashew sales prices recently, expected to positively impact third-quarter production and sales.

“We expect to deliver another strong first-half financial performance from the palm oil operation with the continued sustained period of robust production levels and relatively high historical CPO prices,” said executive director Lincoln Moore.

“We continue to conservatively produce from the cashew operation whilst we eagerly await the commissioning of new equipment which we believe is finally edging towards conclusion.

“We are pleased to see a recent increase in cashew prices which will also greatly assist the financial metrics of the cashew operation moving forward.”

At 0851 BST, shares in Dekel Agri-Vision were up 0.52% at 1.16p.

Reporting by Josh White for Sharecast.com.