MARKET DEVELOPMENT
PREVIEW-Malaysia April Palm Oil Stocks Likely Hit 9-Mth Low
PREVIEW-Malaysia April Palm Oil Stocks Likely Hit 9-Mth Low
09/05/2013 (Reuters) - Malaysia's April palm oil stocks likely fell to their lowest in nine months, with domestic consumption and lower exports outstripping a rise in output, a Reuters survey of five plantation companies showed on Tuesday.
Inventory levels may have dropped 6.1 percent to 2.04 million tonnes, which would be the fourth straight monthly decline and the lowest level since last July. It would also be the closest stocks have come to the 2 million tonne mark, a key psychological milestone, after hitting a record 2.63 million tonnes in December.
Production in the world's No. 2 producer likely increased 4.7 percent from a month ago to 1.39 million tonnes, but the recovery in output may not have been enough to offset exports and local consumption, poll respondents said.
Exports of the tropical oil probably eased 9 percent to 1.4 million tonnes in April from 1.54 million tonnes in March, as demand from China - the commodity's second-biggest buyer after India - slowed during the month.
Imports of crude palm oil from top producer Indonesia are likely to have grown to 60,000 tonnes from 42,433 tonnes the month before, according to the poll.
The medians of the figures provided by the poll respondents imply domestic consumption in April of around 180,000 tonnes.
Factors To Watch:
Lower palm oil stocks may prevent further declines in the benchmark third-month contract on the Bursa Malaysia Derivatives Exchange. The futures contract lost 3.9 percent in April following a global commodities selloff triggered by macroeconomic uncertainty.
A stronger ringgit after Malaysia's ruling coalition won the country's election at the past weekend could also weigh on palm oil prices, as the feedstock becomes more expensive for overseas buyers when the local currency gains against the dollar.
Top producer Indonesia slashed its crude palm oil export tax to 9 percent in May from April's 10.5 percent, and while that is still higher than the 4.5 percent duty imposed by the Malaysian government, the cut could mean that Malaysia's export demand will take a further hit.
Traders will also be keeping a close watch on China's stock levels, which probably eased in end-March from record highs, to gauge the country's buying appetite.
Malaysia and Indonesia will also be counting on buyers restocking ahead of Ramadan, traders said. The Islamic holy month, which comes in July this year, typically sees higher consumption of the edible oil as Muslims break fasts with feasts in the evening.
Breakdown of April estimates (in tonnes):
Range Median*
Production 1,364,882 - 1,405,000 1,388,072
Exports 1,320,000 - 1,477,443 1,400,000
Imports 50,000 - 85,694 60,000
Closing stocks 2,015,358 - 2,168,000 2,040,000
* Official stocks of 2,173,285 tonnes for March, plus the above estimated output and imports give a total April supply of 3,621,357 tonnes. Based on the median of the export and closing stock estimates, Malaysia's domestic consumption in April would be 181,357 tonnes. ($1 = 2.98 Malaysian ringgit)
Inventory levels may have dropped 6.1 percent to 2.04 million tonnes, which would be the fourth straight monthly decline and the lowest level since last July. It would also be the closest stocks have come to the 2 million tonne mark, a key psychological milestone, after hitting a record 2.63 million tonnes in December.
Production in the world's No. 2 producer likely increased 4.7 percent from a month ago to 1.39 million tonnes, but the recovery in output may not have been enough to offset exports and local consumption, poll respondents said.
Exports of the tropical oil probably eased 9 percent to 1.4 million tonnes in April from 1.54 million tonnes in March, as demand from China - the commodity's second-biggest buyer after India - slowed during the month.
Imports of crude palm oil from top producer Indonesia are likely to have grown to 60,000 tonnes from 42,433 tonnes the month before, according to the poll.
The medians of the figures provided by the poll respondents imply domestic consumption in April of around 180,000 tonnes.
Factors To Watch:
Lower palm oil stocks may prevent further declines in the benchmark third-month contract on the Bursa Malaysia Derivatives Exchange. The futures contract lost 3.9 percent in April following a global commodities selloff triggered by macroeconomic uncertainty.
A stronger ringgit after Malaysia's ruling coalition won the country's election at the past weekend could also weigh on palm oil prices, as the feedstock becomes more expensive for overseas buyers when the local currency gains against the dollar.
Top producer Indonesia slashed its crude palm oil export tax to 9 percent in May from April's 10.5 percent, and while that is still higher than the 4.5 percent duty imposed by the Malaysian government, the cut could mean that Malaysia's export demand will take a further hit.
Traders will also be keeping a close watch on China's stock levels, which probably eased in end-March from record highs, to gauge the country's buying appetite.
Malaysia and Indonesia will also be counting on buyers restocking ahead of Ramadan, traders said. The Islamic holy month, which comes in July this year, typically sees higher consumption of the edible oil as Muslims break fasts with feasts in the evening.
Breakdown of April estimates (in tonnes):
Range Median*
Production 1,364,882 - 1,405,000 1,388,072
Exports 1,320,000 - 1,477,443 1,400,000
Imports 50,000 - 85,694 60,000
Closing stocks 2,015,358 - 2,168,000 2,040,000
* Official stocks of 2,173,285 tonnes for March, plus the above estimated output and imports give a total April supply of 3,621,357 tonnes. Based on the median of the export and closing stock estimates, Malaysia's domestic consumption in April would be 181,357 tonnes. ($1 = 2.98 Malaysian ringgit)