KUALA LUMPUR (March 3): Malaysia’s palm oil stocks likely grew 7.6% month-on-month (m-o-m) to 1.43 million tonnes at end-February due to a slower decline in production compared to exports, according to CGS-CIMB.
While revealing its survey findings, CGS-CIMB Futures said it projected a flat m-o-m crude palm oil (CPO) output of 1.13 million tonnes in February, which is better than the historical trend of a 6.8% m-o-m fall in February output over the past 10 years, possibly due to crop recovery.
It also estimated palm oil exports will fall 6% m-o-m in February to 890,000 tonnes due to the high selling prices for CPO and tight supply in Malaysia.
CGS-CIMB also anticipated average CPO price to rise 4% m-o-m to RM3,897 per tonne in February on concerns over the low inventory level of palm oil and global edible oils supplies.
“We project CPO prices to trade at RM3,200 to RM3,700 per tonne in March amid low inventory in Malaysia, which will take time to rebuild. We expect palm oil supply to recover in 2Q21 as weather conditions normalise,” it said.
It maintained its average CPO price forecast of RM2,900/RM2,700 per tonne for 2021/2022 and a “neutral” call on the sector.
Source : The Edge Markets