KUALA LUMPUR (Reuters) - Malaysia’s palm oil inventories for April likely rose 10% from March as coronavirus-driven lockdowns around the world sharply reduced demand, while plantations ramped up production of the edible oil, a Reuters survey showed.
Median April end-stocks likely jumped to 1.91 million tonnes, its highest since December 2019, according to the median estimate of 8 planters, traders and analysts polled by Reuters. MYPOMS-TPO
Production is expected to also grow by 15% from the month before to 1.61 million tonnes, its highest in six months.
April exports likely rose by 4% from March to 1.23 million tonnes. However, it would mark a 25% fall from the year before. MYPOME-PO
Higher inventories are likely to further pressure Malaysia benchmark crude palm oil prices FCPOc3, which have already plunged about 36% since January to trade at 1,987 ringgit ($461.56) due to the coronavirus pandemic.
In May, the market will be looking at demand from India, the European Union and China as exports need to regain traction to keep stockpiles low, said William Simadiputra, an analyst at DBS Vickers Securities.
Malaysia, the world’s second largest palm producer, eased curbs on movement and businesses on Monday after a six-week partial lockdown in an attempt to restart an economy racked by the coronavirus pandemic.
“Local consumption should be on the rise with the conditional movement control order taking place and on Eid re-stocking,” said Marcello Cultrera, institutional sales manager and broker at Phillip Futures in Kuala Lumpur.
“Until we see a stronger increase in demand and domestic consumption, we might have some sideways trading at 1,900-2,200 ringgit until demand resumes,” Cultrera said.
Official palm oil data will be published by the Malaysian Palm Oil Board on May 10.
The median results from the Reuters survey put Malaysia’s consumption in April at 252,537 tonnes.
Reporting by Mei Mei Chu; editing by David Evans and Kim Coghill
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