MARKET DEVELOPMENT
Malaysia End-Feb Palm Stocks Likely Dropped to Six-Month Low, Survey Shows
Malaysia End-Feb Palm Stocks Likely Dropped to Six-Month Low, Survey Shows
07/03/2017 (Reuters) - Malaysia's palm oil inventories likely fell to their lowest in six months at the end of February, aided by declining production that dropped to its lowest in nearly a year, a Reuters poll showed.
Falling inventory levels could prop up benchmark palm oil futures on the Bursa Malaysia Derivatives exchange, which declined nearly 10 per cent in the second half of February before seeing a slight rally last week, tracking soyoil prices.
Palm prices were up one per cent at RM2,891 at the midday break today.
Stockpiles in Malaysia, the world's second-largest palm producer, in February fell 4.4 per cent from a month earlier to 1.47 million tonnes, according to the median forecast of eight planters, traders and analysts in a Reuters poll.
The slide in stockpiles would be the second consecutive month of declines and would be the lowest since August, as production fell in line with seasonal trends.
The poll pegged February output levels at 1.22 million tonnes, a 4.5 per cent fall from January. That would be the fifth straight monthly decline and its lowest since March 2016.
“The lower production is in line with seasonal decline, in which February tends to see the lowest production levels of the year,” said Alan Lim, plantations analyst at MIDF Research in Kuala Lumpur, who expects inventories to remain below two million tonnes for another two to three months.
The survey forecasts that Malaysian exports fell to 1.13 million tonnes in February, down 11.9 per cent from January.
Despite the sharp drop in exports, inventories still fell as “exports plus local consumption should more than offset the production and imports,” said Lim.
The forecast for exports would be the weakest in a year and its biggest decline since September, also in line with seasonal trends.
Shipments of the tropical oil usually weaken from December to February, the northern hemisphere winter period in key palm oil consuming regions, as palm solidifies in cold weather.
Traders however expect to see improved demand in China and Europe as temperatures rise in the second quarter of the year.
“Right now, there is also talk that Middle East demand could be rising as Ramadan is coming in soon in May,” said one Kuala Lumpur-based trader, referring to the Muslim fasting season which causes an increase in palm oil usage.
The median figures from the Reuters survey imply Malaysian consumption of 215,365 tonnes in February. The official data will be released by the Malaysian Palm Oil Board on March 10. — Reuters
Falling inventory levels could prop up benchmark palm oil futures on the Bursa Malaysia Derivatives exchange, which declined nearly 10 per cent in the second half of February before seeing a slight rally last week, tracking soyoil prices.
Palm prices were up one per cent at RM2,891 at the midday break today.
Stockpiles in Malaysia, the world's second-largest palm producer, in February fell 4.4 per cent from a month earlier to 1.47 million tonnes, according to the median forecast of eight planters, traders and analysts in a Reuters poll.
The slide in stockpiles would be the second consecutive month of declines and would be the lowest since August, as production fell in line with seasonal trends.
The poll pegged February output levels at 1.22 million tonnes, a 4.5 per cent fall from January. That would be the fifth straight monthly decline and its lowest since March 2016.
“The lower production is in line with seasonal decline, in which February tends to see the lowest production levels of the year,” said Alan Lim, plantations analyst at MIDF Research in Kuala Lumpur, who expects inventories to remain below two million tonnes for another two to three months.
The survey forecasts that Malaysian exports fell to 1.13 million tonnes in February, down 11.9 per cent from January.
Despite the sharp drop in exports, inventories still fell as “exports plus local consumption should more than offset the production and imports,” said Lim.
The forecast for exports would be the weakest in a year and its biggest decline since September, also in line with seasonal trends.
Shipments of the tropical oil usually weaken from December to February, the northern hemisphere winter period in key palm oil consuming regions, as palm solidifies in cold weather.
Traders however expect to see improved demand in China and Europe as temperatures rise in the second quarter of the year.
“Right now, there is also talk that Middle East demand could be rising as Ramadan is coming in soon in May,” said one Kuala Lumpur-based trader, referring to the Muslim fasting season which causes an increase in palm oil usage.
The median figures from the Reuters survey imply Malaysian consumption of 215,365 tonnes in February. The official data will be released by the Malaysian Palm Oil Board on March 10. — Reuters