MARKET DEVELOPMENT
Malaysia's End-Feb Palm Stocks Hit Six-year Low - MPOB
Malaysia's End-Feb Palm Stocks Hit Six-year Low - MPOB
13/03/2017 (Reuters) - Malaysia's palm oil stocks at the end of February dropped to their lowest in over six years, coming slightly below industry expectations, as exports and local consumption likely outpaced the drop in output.
Stockpiles in the world's second-largest palm oil producer fell to 1.46 million tonnes, 5.3 percent down from January, showed data from industry regulator the Malaysian Palm Oil Board (MPOB) on Friday. This would be the lowest level for end-stocks since January 2011, according to Eikon data. (MYPOMS-TPO)
A decline in the stocks could support palm's benchmark prices that hit their lowest since March 1. Palm prices were in line for a second consecutive session of declines, down 1.6 percent at 2,794 ringgit ($627.16) a tonne on Friday noon.
Palm has lost 2.4 percent so far this week as traders sold on mixed sentiments at an industry conference in Kuala Lumpur.
Leading analysts at the conference said the current price levels are unsustainable and the market, though supported by current tight supplies, is seen falling to 2,500 ringgit a tonne around mid-year when production rebounds as the dry weather effects of the El Nino wear off.
Production in February fell 1.4 percent to 1.26 million tonnes, its lowest levels since March 2016, and its fifth consecutive monthly decline. The drop however was softer than the 4.5-percent fall forecast in a Reuters poll. (MYPOMP-CPOTT)
"Recent weather has led to better (than expected) production in the short term. The rainfall has helped the fruit to ripen soon, and harvesting could be carried forward from January because of Chinese New Year (public holidays)," said Ivy Ng, regional head of plantations research at CIMB Investment Bank, adding that higher local consumption levels probably aided the decline in stocks.
"However, it is not conclusive that the El Nino is fading away. The decline in production appears to be softening, but I think there will be an increase (in output) in March."
Demand for palm oil registered a sharp drop in February, down 14 percent to 1.11 million tonnes as compared with the poll's forecasts of 1.13 million tonnes. The decline was its sharpest monthly fall since September. (MYPOME-PO)
Traders say exports weakened after the Lunar New Year festive season in late January, and as buyers held off purchases pending forecasts at the industry conference.
"The market wanted to know what would be said at the conference. February is also a shorter month," said a Kuala Lumpur-based futures trader.
"But with stockpiles at a six-year low, prices will be kept in check."
The following is a breakdown of Malaysian Palm Oil Board figures and Reuters estimates for February:
(Volumes in tonnes)
Feb 2017 Feb 2017 poll Feb 2016 Jan 2017
Output 1,258,538 1,219,390 1,042,707 1,276,852*
Stocks 1,459,056 1,472,307 2,170,341 1,541,082*
Exports 1,107,011 1,130,000 1,088,864 1,286,800*
Imports 40,331 57,450 67,583 71,591
* Denotes revised figures
($1 = 4.4550 ringgit)
Stockpiles in the world's second-largest palm oil producer fell to 1.46 million tonnes, 5.3 percent down from January, showed data from industry regulator the Malaysian Palm Oil Board (MPOB) on Friday. This would be the lowest level for end-stocks since January 2011, according to Eikon data. (MYPOMS-TPO)
A decline in the stocks could support palm's benchmark prices that hit their lowest since March 1. Palm prices were in line for a second consecutive session of declines, down 1.6 percent at 2,794 ringgit ($627.16) a tonne on Friday noon.
Palm has lost 2.4 percent so far this week as traders sold on mixed sentiments at an industry conference in Kuala Lumpur.
Leading analysts at the conference said the current price levels are unsustainable and the market, though supported by current tight supplies, is seen falling to 2,500 ringgit a tonne around mid-year when production rebounds as the dry weather effects of the El Nino wear off.
Production in February fell 1.4 percent to 1.26 million tonnes, its lowest levels since March 2016, and its fifth consecutive monthly decline. The drop however was softer than the 4.5-percent fall forecast in a Reuters poll. (MYPOMP-CPOTT)
"Recent weather has led to better (than expected) production in the short term. The rainfall has helped the fruit to ripen soon, and harvesting could be carried forward from January because of Chinese New Year (public holidays)," said Ivy Ng, regional head of plantations research at CIMB Investment Bank, adding that higher local consumption levels probably aided the decline in stocks.
"However, it is not conclusive that the El Nino is fading away. The decline in production appears to be softening, but I think there will be an increase (in output) in March."
Demand for palm oil registered a sharp drop in February, down 14 percent to 1.11 million tonnes as compared with the poll's forecasts of 1.13 million tonnes. The decline was its sharpest monthly fall since September. (MYPOME-PO)
Traders say exports weakened after the Lunar New Year festive season in late January, and as buyers held off purchases pending forecasts at the industry conference.
"The market wanted to know what would be said at the conference. February is also a shorter month," said a Kuala Lumpur-based futures trader.
"But with stockpiles at a six-year low, prices will be kept in check."
The following is a breakdown of Malaysian Palm Oil Board figures and Reuters estimates for February:
(Volumes in tonnes)
Feb 2017 Feb 2017 poll Feb 2016 Jan 2017
Output 1,258,538 1,219,390 1,042,707 1,276,852*
Stocks 1,459,056 1,472,307 2,170,341 1,541,082*
Exports 1,107,011 1,130,000 1,088,864 1,286,800*
Imports 40,331 57,450 67,583 71,591
* Denotes revised figures
($1 = 4.4550 ringgit)