11/02/2012 (The Star) - Exports of Malaysian crude palm oil (CPO) are losing ground in their traditional markets to shipments from Indonesia owing to the latter's low palm oil export duty, said market analysts.

This is reflected in the Malaysian Palm Oil Board's (MPOB) statistics for January, which show palm oil exports fell 13.2% to 1.38 million tonnes from 1.59 million in December.

“After more than six months of strong export figures, Malaysia must come up with a quick action to tackle its dampening exports,” a trader told StarBizWeek. “Indonesia's low export duty structure makes its CPO price lower by about RM400 to RM450 per tonne compared with Malaysia's.”

According to the trader, Indonesia had previously before its lower export duty been able to offer or undercut Malaysian exporters' price by about RM50 to RM100 a tonne.

Maybank IB Research, in a report dated Feb 8, had cited industry sources as saying that they expected Malaysia to make a counter-measure announcement on Indonesia's low palm oil export duty at the Palm and Lauric Oils Conference and Exhibition (POC 2012) next month or earlier.

Another trader said that January had traditionally been a “low” export period, especially after the major stockpiling during Ramadan, Eid-Fitr and Deepavali festivals in Asia and the Middle East in the second half of the year.

MPOB also reported lower palm oil stocks and production for January. Stocks fell 2.5% to 2.01 million tonnes from 2.06 million, while production eased by 13.9% to 1.29 million tonnes from 1.50 million previously.

Kenanga Research said in a report that the expansion of CPO production was expected to slow to 4.2% this year from 9.4% last year.

The global CPO yield was exceptionally strong in 2011, with production at 50.2 million tonnes.

The research outfit said production usually slowed after a strong growth in the prior year as “palm trees likely to take a rest”.

For this year, OilWorld has forecast Indonesia to produce 25.4 million tonnes of CPO, while Malaysia's production is seen at 19.2 million tonnes.

As for the local palm oil stocks, industry players still consider the current two million tonnes to be on the high side.

However, many analysts expect local stocks could easily be taken up in the coming months as the global demand for CPO is set to increase by 6.3% this year versus about 4% last year.

OilWorld said global palm oil consumption was expected to increase to 51.2 million tonnes in the October 2011 to September 2012 season, from 48.2 million tonnes previously.

The estimates for the CPO price is for it to trade in the RM3,000RM3,200 per tonne range in the first quarter of 2012.

Yesterday, CPO futures on Bursa Malaysia Derivatives were traded generally lower with the third-month benchmark April contract trading RM13 lower at RM3,135 as at 5.30pm.