Palm oil stockpiles in Malaysia, the world’s second-largest producer, fell the most in more than two years to a seven-month low in March as exports gained for the first time in five months, according to official data.
Inventories shrank 11 per cent to 2.17 million metric tonnes last month from 2.44 million tonnes in February, the steepest monthly drop since January 2011, the Malaysian Palm Oil Board said today. The decline exceeded the median estimate for a seven per cent drop to 2.27 million tonnes in a Bloomberg survey. Output climbed 2.2 per cent to 1.33 million tonnes, while exports increased 10 per cent to 1.54 million tonnes, the board said.
The decline in stockpiles of the commodity used in everything from biofuels to candy to noodles may help stem a 34 per cent slump in prices in Kuala Lumpur in the past year. Futures may climb through May, trading between RM2,400 and RM2,700 a tonne as Malaysia’s currency weakens before elections and inventories drop in Indonesia and Malaysia, the top producers, Dorab Mistry, a director at Godrej International Ltd, said March 22.
“I would perceive this as bullish data because the end-stock is actually lower than market expectations,” said Ryan Long, vice president of futures and options at OSK Investment Bank Bhd in
Kuala Lumpur. “Production is still quite slow, especially in East Malaysia, so I wouldn’t expect stocks to build up yet at the end of this month.”
Reserves may remain near two million tonnes in the next two months, Long said. Shipments probably jumped in March as buyers such as India and China replenished stockpiles, he said.
Exports from Malaysia gained 3.5 per cent to 456,440 tonnes in the first 10 days of this month from 441,025 tonnes in the same period in March, surveyor Intertek said today.
Palm oil for June delivery ended the morning session little changed at RM2,397 a tonne on the Bursa Malaysia Derivatives exchange. Prices could rally as high as RM2,520 in the next two weeks, Long said.– Bloomberg
Source : Business Times