Thursday 28 Mar 2024
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KUALA LUMPUR (June 4): Malaysia’s palm oil stocks likely grew by 5% month-on-month (m-o-m) to 1.62 million tonnes at end-May due to higher output, CGS-CIMB said today.

Its analyst Ng Lee Fang said in a note that findings from a survey of palm oil areas by the CGS-CIMB futures team revealed that Malaysia's crude palm oil (CPO) output was 1.58 million tonnes in May (+3.4% m-o-m; -5% year-on-year [y-o-y]).

“This was broadly in line with historical trends of a 5% m-o-m rise in May output over the past 10 years, as well as the past 10-year average CPO output of 1.58 million tonnes for the month of May,” she said.

Meanwhile, palm oil exports likely grew 0.6% m-o-m based on export statistics by cargo surveyors Intertek Testing Services (ITS; +1.5% m-o-m), SGS (-1.2% m-o-m) and AmSpec Malaysia (+1.6% m-o-m).

“Stronger demand from China was partially offset by weaker demand from India (due possibly to high Covid-19 cases in the country),” she said.

Thus, she estimated that Malaysia's palm oil inventory probably grew by 5% m-o-m but declined by 20% y-o-y to 1.62 million tonnes at end-May.

According to her, this was a departure from historical trends, where Malaysian palm oil stocks in May declined by an average of 1.1% m-o-m over the past 10 years.

“Despite this, the projected palm oil stock level in Malaysia remains tight as it is 19% below the historical average May palm oil stock levels for the past 10 years of 1.95 million tonnes,” she said.

The official figures will be released on June 10.

Ng also noted that the average CPO price rose by 8% m-o-m and 120% y-o-y to RM4,572 per tonne in May, another new monthly record high, driven by a sharp rise in competing edible oil prices.

She projected CPO prices to remain firm at RM3,500 to RM4,200 per tonne in June amid low global edible oil inventories, which will take time to rebuild.

She still expects CPO supply to recover in the coming months, but at a slower rate due to labour shortage woes.

Edited BySurin Murugiah
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