11/04/2012 (The Star) - Local palm oil inventory finally eased to below two million tonnes in March after staying above the mark for the past seven months, thanks to export-led demand from major consuming nations.

The Malaysian Palm Oil Board (MPOB), in releasing its latest statistic yesterday, said palm oil stocks fell 5% to 1.96 million tonnes in March compared with 2.06 million tonnes in February.

The lower inventory was also reflected by palm oil exports, which rose 10.8% to 1.34 million tonnes for the month under review from 1.21 million tonnes a month earlier.

Exports of biodiesel, however, eroded by 97% to 369 tonnes in March from 11,249 tonnes in February.

Higher output: CPO production in March stood at 1.21 million tonnes, up 2.13% from
1.19 million tonnes in the previous month.

Crude palm oil (CPO) production for the month under review stood at 1.21 million tonnes, up 2.13% from 1.19 million tonnes in the previous month.

As expected, CPO imports shrank significantly by 78.4% to 27,908 tonnes in March from 129,344 tonnes in February. A trader said this was due to the limitation as a result of the Indonesian lower refined palm oil export duty structure imposed in October last year which encouraged more CPO to be refined by its own downstream refineries.

Malaysia last year imported a total 1.3 million tonnes of CPO, mainly from Indonesia to support the utilisation rate of its local refineries.

The trader added:“Local refiners do not expect Indonesia to export more CPO this year if the latter's refining capacity improved and the export duty differential continued to favour its own processed palm oil players.”

Meanwhile, CPO futures on Bursa Derivatives which succumbed to profit-taking in early trade, closed higher yesterday mainly boosted by the encouraging MPOB's lower stock and higher export figures for March.

The benchmark three-month June contract as at 5pm was traded RM47 higher at RM3,622 at tonne, after hitting a 13-month high of RM3,623 per tonne on Monday.

A dealer said the market was also taking its cue from independent cargo surveyor Intertek which reported that Malaysia's palm oil exports rose 7.8% to 478,948 tonnes in the first 10 days of April compared with the same period in March.

Malaysian Estate Owners Association president Boon Weng Siew, meanwhile, said CPO prices in the mid-term could stay above RM3,000 per tonne given the low inventory situation and better consumption outlook.

CPO production was also likely to slow down in the coming months up to June, he added.