" An escalation in mass culling may cut soybean meal demand/prices, and in turn, crush margins in China," it says, noting CBOT front-month soybean futures fell by 6% over the past week on fears export demand would slow on the culling. But DBSV notes the culling has been insignificant so far and it is keeping its FY13 oilseed and grains pretax margin forecast intact.

If a slowdown in soybean imports and crushing has consequences for China's domestic soybean-oil supply, palm-oil imports could increase as a substitute, with palm oil prices likely to continue to recover, the house says. But it adds, Indonesian refining margins are weakening and could be even lower if imputing trade barrier costs such as an Indian import tax.

It cuts Wilmar's FY13-15 earnings forecasts by 4%-8% and lowers its target to $3.72 from $3.88. It keeps a Hold call. The stock is down 2.7% at $3.30.

UOB KayHian raises Wilmar to Buy from Hold.

“We foresee 2013 pre-tax margin to be more stable and have better visibility. As Asia’s largest agri-commodity company, Wilmar can have better bargaining power in a high-inventory market and enjoy lower raw material prices.”

It expects Wilmar to benefit from the release of oilseeds and vegetable-oil reserves in China, starting in early March “as the largest oilseed crusher and consumer pack cooking oil producer, Wilmar will bid for these, which are usually released from national reserves at a below-market price.”

It raises its target to $3.80 from $3.70 after applying a higher 2013 P/E of 15x vs the previous 13x for the oilseed & grain division on the oilseed-reserves release and strong sales volume growth from non-cooking oil consumer packs. The stock is up 0.9% at $3.39.