May 8, 2013 / 3:36 AM / 5 years ago

PREVIEW-Malaysia April palm oil stocks likely hit 9-mth low

* WHAT: Malaysia's April palm oil stocks, output and exports
data
    * WHEN: May 10, after 0430 GMT

    By Chew Yee Kiat
    SINGAPORE, May 8 (Reuters) - Malaysia's April palm oil
stocks likely fell to their lowest in nine months, with domestic
consumption and lower exports  outstripping a rise in output, a
Reuters survey of five plantation companies showed on Tuesday.
    Inventory levels may have dropped 6.1 percent to 2.04
million tonnes, which would be the fourth straight monthly
decline and the lowest level since last July. It would also be
the closest stocks have come to the 2 million tonne mark, a key
psychological milestone, after hitting a record 2.63 million
tonnes in December.
    Production in the world's No. 2 producer likely increased
4.7 percent from a month ago to 1.39 million tonnes, but the
recovery in output may not have been enough to offset exports
and local consumption, poll respondents said.
    Exports of the tropical oil probably eased 9 percent to 1.4
million tonnes in April from 1.54 million tonnes in March, as
demand from China - the commodity's second-biggest buyer after
India - slowed during the month.
    Imports of crude palm oil from top producer Indonesia are
likely to have grown to 60,000 tonnes from 42,433 tonnes the
month before, according to the poll.
    The medians of the figures provided by the poll respondents
imply domestic consumption in April of around 180,000 tonnes.
    
    FACTORS TO WATCH:    
    Lower palm oil stocks may prevent further declines in the
benchmark third-month contract on the Bursa Malaysia
Derivatives Exchange. The futures contract lost 3.9 percent in
April following a global commodities selloff triggered by
macroeconomic uncertainty.  
    A stronger ringgit after Malaysia's ruling coalition won the
country's election at the past weekend could also weigh on palm
oil prices, as the feedstock becomes more expensive for overseas
buyers when the local currency gains against the dollar.
    Top producer Indonesia slashed its crude palm oil export tax
to 9 percent in May from April's 10.5 percent, and while that is
still higher than the 4.5 percent duty imposed by the Malaysian
government, the cut could mean that Malaysia's export demand
will take a further hit.  
    Traders will also be keeping a close watch on China's stock
levels, which probably eased in end-March from record highs, to
gauge the country's buying appetite. 
    Malaysia and Indonesia will also be counting on buyers
restocking ahead of Ramadan, traders said. The Islamic holy
month, which comes in July this year, typically sees higher
consumption of the edible oil as Muslims break fasts with feasts
in the evening.    
                 
    Breakdown of April estimates (in tonnes):                  
                        Range                 Median*           
  
  Production      1,364,882 - 1,405,000     1,388,072           
  Exports         1,320,000 - 1,477,443     1,400,000           
 
  Imports            50,000 -  85,694          60,000         
  Closing stocks  2,015,358 - 2,168,000     2,040,000       
 
  * Official stocks of 2,173,285 tonnes for March, plus the
above estimated output and imports give a total April supply of
3,621,357 tonnes. Based on the median of the export and closing
stock estimates, Malaysia's domestic consumption in April would
be 181,357 tonnes.
($1 = 2.98 Malaysian ringgit)

 (Editing by Tom Hogue)

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