SINGAPORE, April 5 — Malaysia’s palm oil stocks likely edged lower in March as production eased for the sixth straight month, a Reuters survey of five plantation companies showed today.
Inventory levels may have dropped 3.8 per cent in March to 2.35 million tonnes, marking the third monthly decline, to the lowest level seen since last September.
Stocks hit a record 2.63 million tonnes in December. Production most likely fell 1.2 per cent from a month ago to 1.28 million tonnes, as crude palm oil yields remained in a seasonal low cycle, although the decline is significantly smaller than a near one-fifth drop seen in February.
The drops in both output and inventories are expected to support palm oil futures prices, which have been stuck below RM2,600 (US$840) a tonne since October 2012 after staying well above that mark for almost two years.
Exports of the tropical oil probably eased 4 per cent from a month ago to 1.34 million tonnes in March.
Crude palm oil shipments fell after the implementation of an export tax of 4.5 per cent in March, up from no tax applied in February.
Despite inching lower, exports were still more than enough to offset production and imports for the month.
Imports of crude palm oil from top producer Indonesia are likely to have grown to 80,000 tonnes from 55,410 tonnes the month before, according to the poll.
Factors to watch
The benchmark third-month contract on the Bursa Malaysia Derivatives Exchange, which lost 0.8 per cent in March and 0.5 per cent so far in April, may gain support from the sinking stock levels.
The edible oil could rise to RM2,400 to RM2,700 per tonne by the end of May, as weaker production sped a fall in the stockpiles, said leading analyst Dorab Mistry.
Export demand might also pick up in coming months because of attractive prices and plentiful supplies compared with rival edible oils such as soyoil, Hamburg-based oilseeds analysts Oil World said early this week.
India’s imports of palm oil could rise more than 17 per cent in the year to October 2013 to stand at 9 million tonnes, as the edible oil was the cheapest available, despite an import duty, the country’s top importer of edible oils said.
Malaysia and Indonesia, the world’s top palm oil producers, will keep their crude palm oil export tax rates for April at 4.5 and 10.5 per cent respectively, unchanged from March. — Reuters