CIMB : Malaysia palm oil stockpiles likely peaked in December

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KUALA LUMPUR (Jan 11): Inventories likely peaked after hitting a new record end-Dec and may ease 2% m/m in January due to lower output, CIMB regional head of agribusiness Ivy Ng says in Jan 10 report.

* NOTE: Palm Reserves in World’s Second-Largest Grower Hit Fresh Record

* Stockpiles at the end of Dec. were higher than expected and could dampen near term crude palm oil prices

** Spot CPO prices seen trading RM1,900-RM2,200/ton in Jan.

* End-Jan. inventories may fall to 3.14m tons as exports and consumption exceed production

* Jan production seen -11% m/m to 1.62m tons due to seasonal factors

* Exports seen +5% m/m to 1.45m tons as traders stock up ahead of Lunar New Year

* Avg CPO price was RM2,232/ton in 2018, slightly lower than CIMB’s forecast of 
RM2,260/ton; -20% y/y from avg of RM2,783 in 2017

* Key events to watch are development of an El Nino, implementation of biodiesel mandate in Indonesia, palm oil exports to India after the import duty cut 

* CIMB maintains avg CPO forecast of RM2,400/ton for 2019, RM2,500/ton for 2020