KUALA LUMPUR, April 11 (Rueters)- Our final estimate on CPO production inMarch shows an upward revision of 20,000 tonnes to 885,000 tonnes. Thisrepresents an increase of 112,000 tonnes or 14.4 percent over February.The stronger than expected increase was attributed mainly to excellent oilextraction rates (OER). This was most evident in Sabah, the largestproducing state. Average oil extraction rates in the state surged 0.75percentage point or 3.6 percent to a record 21.7 percent. Several millsobtained exceptional oil extraction rates of 24 percent. Some plantationsattributed the excellent oil rates to near ideal weather conditions duringthe month.Overall oil extraction rates for the country at an estimated 20percent - up from 19.2 percent a year ago - was an all-time record highfor the month. CPO production in Peninsular Malaysia rose by around 15percent or slightly better than the increase of around 13 percent in EastMalaysia.For the first three months this year, CPO production amounted to 2.59million tonnes. This represents a contraction of 8.6 percent when comparedto the same period last year. Output in terms of fresh fruit bunches(FFBs) fell an estimated 12 percent while yield in terms of FFBs/hectarecontracted 15 percent.The estimate on palm oil offtake in March remains unchanged at onemillion tonnes. In line with the upward revision in production, theestimate on palm oil stocks at end-March is thus scaled upward to 1.18million tonnes. This represents a drop of about 100,000 tonnes from thepreceding month. It also means the bottom-line is little changed from ourMarch 21 estimate as the better-than-expected offtake was matched byhigher-than-expected supply.The downtrend in stocks of PK/PKO, oil basis, continued in March,albeit at a much slower rate of an estimated 6,000 tonnes. This compareswith month-on-month declines of around 14,000 tonnes in February and22,000 tonnes in January. Production of PK in March is estimated to haveincreased 30,000 tonnes or 13.5 percent to nearly 252,000 tonnes.China's State Development Planning Commission (SDPC) commenced todistribute TRQs for palm oil and other commodities since last Friday,April 5, or six weeks after it started to receive applications for thequotas. The SDPC had so far declined to reveal the exact quotasdistributed. Some traders closely linked to Chinese importers were advisedthe full 2.4 million tonnes quota for palm oil were released of which 66percent or 1.58 million tonnes went to private firms.However, state-owned enterprise which received the balance werebelieved to have been told by senior government officials to go slow inutilising their quotas. The protracted delays in the distribution ofquotas had resulted in an estimated 250,000 tonnes palm oil jammed up atvarious customs points. It would take some weeks before the cargoes couldbe discharged/cleared. MPOB figures show Malaysia's shipped 201,000 tonnespalm oil to China in January-February. By the end of March the quantity isestimated to have reached 395,000 tonnes or some 130,000 tonnes more thanthe corresponding three-month period of last year. Inclusive of shipmentsfrom other countries, the aggregrate quantity is estimated at 486,000tonnes or an average of 162,000 tonnes/month. A simple extrapolationsuggests total palm oil imports by China this year should at least reachtwo million tonnes or not less than the quantity taken last year.Palm oil price continued to be range-bound and appeared ratherresilient, as reflected in the steady to firm undertone in CPO futuresduring the greater part of yesterday after cargo surveyors reported alarger than expected drop in shipments in April 1-10. The June contractsettled at 1,176 ringgit, up 16 ringgit for the day.

(The informations and opinions expressed in this article represent theviews of the author only. They should not be seen as necessarilyreflecting the views of Palm News)