6 May 2019 (The Edge Markets MY) KUALA LUMPUR : Inventories est. -7% m-o-m, +25% y-o-y to 2.72 million tons at end-April, CIMB regional head of agribusiness Ivy Ng says in May 3 report.

* The lower stockpiles should be supportive of palm prices but a further drawdown may be required to boost prices in 2H: Ng

* April production est. -2.2% m-o-m to 1.63 million tons, according to survey of 21 plantation areas by CIMB Futures

** That’s below historical avg m-o-m increase of 4% for April over past 10 years; may be due to high production base in March, which was highest recorded for the month

** Projected output for April is +5% y-o-y, suggesting that yields remain strong though they appear to have started to ease

* Exports seen +1% m-o-m to 1.63 million tons in April

** Stronger exports likely due to re-stocking by traders ahead of Ramadan in view of CPO’s attractive discount to soyoil

* Domestic consumption seen at 303,000 tons in April vs 313,000 tons in March; imports est. at 100,000 tons vs 131,000 tons

* Key factors to watch in May: Output in Malaysia and Indonesia; El Nino weather developments in key palm oil regions; biodiesel use; Indonesia’s policies on palm trade following Malaysia’s decision to suspend CPO tax until year-end; crude oil price and China’s biodiesel demand

* CPO forecast to trade in RM1,900-2,300/ton range in May

** CIMB maintains neutral rating on sector; Genting Plantations top pick