KUALA LUMPUR: Crude palm oil (CPO) for third-month delivery fell to a low of RM1,897 per tonne in early trade on Tuesday on expectations that prices were expected to dip in the immediate term.However, it managed to erase some of the losses and it was down RM4 to RM1,918 around 10.45am local time.OSK Investment Research said it was maintaining a Neutral call on the sector. It was maintaining an average price assumption of RM1,650 for CY09 compared with the current price of above RM1,900. This implied that it expected prices to trend down in the immediate term.“Strong buying support is only expected at below the RM1,600 level. We suggest that investors lighten their holding in the sector with the view of buying back when valuations become undemanding,” it said.The research house said independent cargo surveyor Societe Generale de Surveillance (SGS) reported that Malaysia’s palm oil exports from Feb 1 to 15 came in at 494.200 tonnes, down 13% from the same period in January. Intertek, another cargo surveyor, reported a 12% decline in Malaysia’s exports number to 509,200tonnes.OSK Research said it is not unusual to see a decline in February exports, which was partly due to a seasonal decline in February production. Between 1998 and 2008, February production fell by an average 6.4% month-on-month. As such, it was only logical that exports fall in tandem with production levels. Between 1996 and 2008, exports fell by an average of 9.1%.It said there was a historical pattern of exports slowing down more than production and this had a lot to do with the tendency of exports to China slowing substantially given that the Chinese New Year festive season falls on the month of February.However, it said exports to India, Pakistan and the US all fell sharply during the period. Exports to India fell from 90,400 tonnes to 39,100 tonnes, Pakistan from 80,100 tonnes to 22,800 tonnes while exports to the US declined from 75,000 tonnes to just 33,000 tonnes. Exports to the EU were up marginally at 92,900 tonnes versus 89,300 tonnes earlier.
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