CIMB Research upgraded Singapore-listed palm oil plantation firms to 'overweight' from 'trading buy' but downgraded Indonesia-listed peers to 'neutral' from 'overweight'.
Singapore-listed companies will be "less impacted by the minimum wage increase (in Indonesia) due to their geographically-diversified estates, as well as have better prospects in light of their exposure to the domestic cooking oil sector", CIMB said.
It lowered its average crude palm oil price forecasts by 7-9 percent for 2012-2014 to reflect waning risks from El Nino.
The brokerage upgraded Singapore's Wilmar International Ltd to 'outperform' from 'neutral', and raised its target price to S$3.90 from S$3.52, citing a recovery in earnings due to better crushing margins and higher sales volumes in 2013.
By 0147 GMT, Wilmar shares were up 0.6 percent at S$3.21, but are the biggest underperformer in the sector, falling 36 percent so far this year against the Straits Times Index's 16 percent gain.
Golden Agri-Resources Ltd was also upgraded to 'outperform' from 'trading buy', as CIMB expects its shares to ride on the recovery in crude palm oil prices in the first half of the year.
CIMB downgraded Indonesia's Astra Agro Lestari to 'neutral' from outperform and cut target price to 23,300 rupiah from 27,400 rupiah, due to rising cost pressures.
0949 (0149 GMT)