10.04.2018 (Platts) - Malaysian palm oil production was higher month on month in March by 17.21% at 1.57 million mt, as palm trees began to produce more fruit after a seasonal lull in production, data from the Malaysian Palm Oil Board showed on Tuesday.

A rise in CPO export of 19.20% month on month in March to 1.57 million mt contributed to lower CPO inventories within Malaysia which fell 6.24% to 2.3 million mt, the data showed.

Bangladesh, India, China, Pakistan, South Korea and Turkey imported increased volumes of CPO, while exports to the EU fell month on month.

However, CPO inventories in Malaysia were very high for the time of year, showing an increase of 7.51% in March 2018 from March 2017.

A market participant said that the relatively high inventory level, year on year, had prompted the outgoing Malaysian government to extend the zero export duty on CPO until the end of April or if inventories fall to 1.6 million mt rather than raising it to 5%.

Finally, the data showed that Malaysia exported 24,373 mt of PME in March, which was lower than February's 34,875 mt.

However, latest shipping data from cargo surveyors ITS released on Tuesday showed that Malaysia had only shipped 1,800 mt of PME over April 1-10.

By contrast, Indonesia exported 35,000 mt of PME to the EU during April 1-10, the ITS data showed. This ties in with the trend after EU anti-dumping duties were reduced to 0% for four Indonesian producers, who have begun selling and exporting their lower priced PME to Europe.

Malaysian PME producers shipped substantial amounts of PME until March, which were shipments from deals done before the change in EU anti-dumping duties, however, market sources say that there would be limited or no volumes of PME shipped to Europe from Malaysia after March-April.

This is because Malaysian prices are higher than Indonesian prices and there is 6.5% import duty on Malaysian PME imports into the EU, which reduces its competitiveness against Indonesian PME.