CPO Stocks Seen at Six-Month Low

Malaysia’s January palm oil stocks likely dropped to a

six-month low as overseas demand outpaced sluggish output, a Reuters

poll showed yesterday.

Inventories in the world’s No. 2 producer dropped 10.2 per cent to

1.45 million tonnes, the median survey of five plantation houses

showed.

Production tumbled 14.8 per cent to 1.05 million

tonnes as harvesting activities in key growing regions states were

stalled by floods and heavy rains, which may have resulted in weaker

yields.

Exports fell 5.1 per cent to 1.22 million tonnes,

but outpaced production. China slowed down buying ahead of this

month’s Lunar New Year holidays due to ample stocks and higher prices

of vegetable oils.

January imports of crude palm oil from

Indonesia, the No. 1 producer, rose 13.1 per cent to 120,000 tonnes, as

firms tried to ship out as much as they could before the Jakarta

raised export taxes to 25 per cent from 20 per cent this month.

Traders said output may continue to fall as floods inundated

major planting states of Johor and Sabah, that together make up more

than half of national output.

Although the rains have

slowed and floods are receding, planters are concerned that prolonged

moisture will affect yields.

Overseas demand is expected

to recover after Chinese New Year holiday but may be muted due to the

high prices. Palm oil hit a three-year high yesterday.

Imports from world’s No. 1 palm oil producer may decline after the

Indonesian government imposed higher exports tax in February as prices

continue to rise.

The rally may continue if the rainy

weather gets worse in Malaysia and Indonesia. Also the impact of

weather in Argentina, which exports competing soyaoil, will be closely

watched.

Recent weather forecast showed hot and dry weather

in southern hemisphere that has stressed soyabean output could ease

in recent weeks.

Analysts said the US Department of

Agriculture is expected to report tighter global ending soyabean stocks

in February. – Reuters

Leave a Reply