PETALING JAYA: The decline in palm oil stocks in March does not come
as a surprise as it is approaching the typically “low stock season” from
April to May.
According to the Malaysian Palm Oil Board’s
monthly statistics, palm oil stocks declined 7.5% to 1.65 million tonnes
in March month-on-month.
Exports for the month under review,
however, increased by 7.65% to 1.4 million tonnes while crude palm oil
(CPO) production swelled by 19.9% to 1.4 million tonnes.
OSK Research’s Alvin Tai
said palm oil stocks usually bottomed out in April to May and that
stocks were expected to stay flat or drop further this month.
“Production
in March is still relatively low coming out of February’s trough,” he
told StarBiz.
CPO production in February fell 12.45% to
1.2 million tonnes month-on-month.
March released palm oil
figures were also in line with palm oil experts and independent cargo
surveyors’ forecast for Malaysia’s stocks and exports.
LMC
International Ltd chairman Dr James Fry said about two weeks ago that
the CPO price was expected to increase marginally in the next six months
due to the seasonal factor that stocks would fall as demand picked up.
Palm oil stocks had been on the decline from the record level of
2.24 million tonnes late last year to about 2.23 million tonnes in
January and two million tonnes in February.
Fry forecast the CPO
price would fluctuate at between RM2,400 and RM2,600 this year.
In
mid-March, Intertek data showed palm oil exports climbed 25% in the
first 10 days of March compared with the same period in February.
CPO
for July delivery at 6.20pm yesterday was at RM2,535 per tonne, down
RM59.
Other developments that might have significant impact on
the country’s CPO demand would be China’s difficulties or suspension in
approving permits to import soyoil from Argentina, as a trade rift
widened between the biggest buyer and largest supplier of the commodity,
according to Bloomberg on April 11.
This lull of soyoil
may create new demand for other vegetable oils, such as CPO, from China
as a replacement.
Source : The Star
