Business Times Malaysian palm oil stocks may hit 20-month low

Hamburg

Malaysia's end-March palm oil stocks may fall to a 20-month low of between 1.30 million and 1.40 million tonnes from 1.56 million tonnes at the end of February, Hamburg-based oilseeds analysts Oil World forecast yesterday.

Official crop agency Malaysian Palm Oil Board is due to release the March palm oil exports, production and stocks data on Friday.

Palm oil prices reached a six-month high in early April, partly because of expectations sluggish Malaysian output has cut stocks in the key exporting country.

"The current lean production period is obviously leaner than is usually the case," Oil World said. "Private estimates point to a decline in Malaysian palm oil output in March by more than 5 per cent compared to February which is a rather unusual occurrence."

"If this is confirmed, Malaysian palm oil stocks were possibly reduced to a 20-month low of only around 1.30 to 1.40 million tonnes by the end of March, considering that exports remained large at more than 1.2 million tonnes."

Malaysian stocks had already been reduced severely from 2.27 million tonnes in early December 2008, helping keep palm oil prices firm in the face of the global economic slowdown.

"The bull run in palm oil prices may not have run its course," Oil World said. "There may still be several weeks with unusually small palm oil price discounts or even premiums over soya oil before the foreseeable recovery in output starts making palm oil more attractive again for consumers." - Reuters