Felda Global Ventures, can things get any worse?

The palm oil industry in Malaysia isn't as free a market as one might think.  For instance.  Many producers have an unusual calmness when it comes to their product.  They think it's as good as money.  They won't bother sourcing for buyers because, there will always be one guy to buy it, Felda.

They know no real hardships because sourcing for buyers and refiners is a pricey endeavour.  In the US, sourcing for buyers in commodities is hard, but rewarding.  It teaches the farmers that no one can be relied on except for themselves and the work they do in not only crop production, but customer relationships.  

Sourcing for buyers is hard work, but a reality of a free market product.  Palm oil is a free market product outside of Malaysia.  In Malaysia, it is not.  Too bad, because efficiencies are lost and job opportunities foregone because of this entitlement attitude.  

Because Felda is a government entitiy, it will not use its infrastructure as leverage in negotiating lower prices from the local producers, which is why conflict of interest exists and why investors should be wary.

From Alliance Bank research:

 Upstream plantations’ 3Q14 PBT grew 32% y-o-y to RM146.4m. This was in line with increases in FFB and CPO output, which expanded by 3% and 13% y-o-y to 1,340k MT and 909k MT, respectively.

However, realised ASP eased y-o-y to RM2,317/MT (vs. RM2,341 in 3Q13). This was however offset by a weak downstream segment, which booked pretax loss of RM117.2m for the quarter (including RM52.0m unrealized loss on commodity contracts in Canada and RM50.7m loss due to negative domestic refining margins)