12/06/2012 (The Star) - Local palm oil inventory in May fell 4.5% to the lowest in 13-month at 1.76 million tonnes compared with 1.85 million tonnes recorded a month earlier, according to the Malaysian Palm Oil Board (MPOB).

Production, however, rose 8.7% to 1.38 million tonnes for the month under review compared with 1.27 million tonnes in the previous month, MPOB said in its latest palm oil statistics released yesterday.

Palm oil exports were up by 4.8% to 1.39 million tonnes in May, while imports added 4.3% to 129,441 tonnes respectively,

MPOB said the average fresh fruit bunches price was down by 9.5% to RM34.23 per tonne for the month under review from RM37.83 per tonne a month ago.

Meanwhile, CPO futures on Bursa Derivatives Exchange ended on a slightly higher note as the market reacted positively to MPOB's lower palm oil inventory and increasing demand outlook, dealers said.

The three-month benchmark CPO futures contract for August rose RM16 to settle at RM2,989 per tonne.

It failed to close above the RM3,000 per tonne level despite touching a high of RM3,028 per tonne in early trade yesterday.

A trader told StarBiz that the price of CPO would likely climb back to RM3,000 per tonne level later this week as many major importing countries are undertaking stockpiling activities.

However, independent cargo surveyour Intertek reported that local palm oil exports fell 6.6% in the first 10 days of June from the same period in May.

A total of 420,592 tonnes of palm oil were tracked, versus 450,269 tonnes in the same period last month, Intertek said in an e-mailed statement to Bloomberg.

Meanwhile, palm oil expert Godrej International director Dorab Mistry at an industry conference in Mumbai last week has revised his bullish CPO price projection at RM4,000 per tonne on concerns over rising output, a slowing Chinese economy and deepening debt crisis in Europe.

“Palm oil may tumble 9% to the lowest level in 20 months as a slowdown in China and Europe cuts demand,” he said.

He pointed out that CPO futures may slump to as low as RM2,700 per tonne in the absence of fresh stimulus by the United States to revive growth.