PREVIEW-Malaysia Feb palm oil stockpiles forecast to fall to four-month low
Reuters (05/03/2018) –
* Feb end-stocks forecast down 6.9 pct at 2.37 mln T -survey
* Output in Feb likely fell 12 pct to 1.4 mln T -survey
* Exports forecast to fall 11.9 pct to 1.33 mln T in Feb-survey
* Malaysian Palm Oil Board data due March 12
KUALA LUMPUR, March 5 (Reuters) - Malaysian palm oil stocks are expected to fall to a four-month low at the end of February as production declines outweighed a drop in exports, according to a Reuters poll.
Palm stockpiles in Malaysia, the world's second-largest producer after Indonesia, are expected to have fallen 6.9 percent to 2.37 million tonnes, its lowest since October 2017, to the median of eight estimates from planters, traders and analysts polled by Reuters. MYPOMS-TPO
Declining stockpiles could boost benchmark palm oil prices, which have fallen their lowest since Feb. 5 after major edible oils importer India raised its palm oil import tax to the highest in over a decade.
Palm prices were down 0.9 percent on Monday morning at 2,453 ringgit ($629.46) a tonne.
Poll respondents said stocks likely fell on declining production, which for February was pegged at 1.4 million tonnes.
The forecast output is down 12 percent from the previous month and would be at its lowest in a year. MYPOMP-CPOTT
"We think production should bottom in February... on fewer working days," said Voon Yee Ping, a plantations analyst at Kenanga Research.
"Looking ahead, we believe production is likely to continue seeing good year-on-year growth for the rest of first half 2018, particularly in Sabah," said Voon, referring to the state in East Malaysia.
Production of palm oil, commonly used to make various products from cooking oil to cosmetics, is expected to seasonally decline in the first quarter of the year before rising again towards peak production in the third quarter.
Annual output in Indonesia and Malaysia, the world's top two producers, may rise to record levels in 2018 as palm trees fully recover from a crop damaging El Nino weather pattern.
The poll also forecast for exports to fall 11.9 percent to 1.33 million tonnes in February, its lowest since April, due to slower demand from China. MYPOME-PO
"China imported less palm oil due partly to the high stockpile of edible oils in the country and rising soybean oil supplies due to higher domestic crushing activities," said Ivy Ng, regional head of plantations research at CIMB Investment Bank.
Chinese palm oil imports could fall this year as it boosts soybeans purchases instead, giving it ample supplies of domestically produced soyoil.
Palm's demand moving forward could be further impacted by India's move to raise its import taxes.
"It will make palm oil costlier in India by around 15 percent. This could lead to weaker demand for palm oil from India, resulting in softer CPO prices," said Ng.
Official data will be released by the Malaysian Palm Oil Board after 0430 GMT on March 12.
The median figures from the Reuters survey imply Malaysian consumption of 266,547 tonnes in February.
Breakdown of February estimates (in tonnes):
Range Median
Production 1,320,000 - 1,409,000 1,395,600
Exports 1,230,000 - 1,377,047 1,333,392
Imports 10,000 - 35,000 28,350
Closing Stocks 2,300,000 - 2,457,000 2,371,691
* Official stocks of 2,547,680 tonnes in January plus the above estimated output and imports give a total February supply of 3,971,630 tonnes. Based on the median of the exports and closing stocks estimates, Malaysia's domestic consumption in February would be 266,547 tonnes.
($1 = 3.8970 ringgit)