The Star Palm oil stockpile hit two-year low

Petaling Jaya

CPO output drops further amid lower demand and higher prices

Malaysian palm oil stocks fell to the lowest in almost two years in April as crude palm oil (CPO) production dropped further year-on-year amid lower demand and higher prices.

According to the Malaysian Palm Oil Board, stockpiles in April stood at 1.29 million tonnes, down 27.8% from a year ago and 5.4% month-on-month, while CPO production fell 3.1% year-on-year although it gained 0.8% to 1.28 million tonnes month-on-month.

Palm oil exports reversed a 1.2% gain in March to contract 5.7%, or 1.18 million tonnes, in April. On a month-on-month basis, palm oil exports were down 5.8% in April compared with March’s 0.3% gain.

Meanwhile, independent cargo surveyor Intertek reported yesterday that palm oil exports for the first 10 days of May were up 1.1% to 403,934 tonnes compared with 399,703 tonnes in the same period in April.

Societe Generale de Surveillance said in another report that palm oil exports rose 11% to 433,024 tonnes compared with 391,223 tonnes in the same period in April.

It estimated that China was the top export destination, followed by the EU, India, the US and Iran.

CIMB Investment Bank Bhd analyst Ivy Ng told StarBiz that the CPO price should remain positive in the short term due to several factors, including weather conditions, affecting major planting areas as well as the lower palm oil stock levels.

“The year-to-date shortfall in supply will lead to higher price volatility in the near term as the market is sensitive to newsflow on production prospects and exports,” she said in an April 17 sectoral report.

Ng said other factors that might affect prices were the conflict between farmers and the government in Argentina, US soybean plantings and speculative fund flows.

AmResearch Sdn Bhd analyst Gan Huey Ling said April’s decline in inventory was mainly due to low carry-over stocks and weak output.

She said that in the first four months of the year, palm oil exports amounted to 5.06 million tonnes, which was 9.8% higher than the same period last year.

“The month-on-month decline in exports can be attributed to China and the US,” Gan said. China and the US both imported 17% less palm oil month-on-month in April.