May 4, 2018 / 4:48 AM / 10 months ago

PREVIEW-Malaysia's April palm oil stockpiles forecast to fall to a six-month low - survey

    * April end-stocks seen falling to 2.23 mil T -survey
    * Output seen flat from previous month at 1.57 mil T -survey
    * Exports forecast to dip from 18-month top to 1.48 mil T
    * Malaysian Palm Oil Board data due May 10

    By Emily Chow
    KUALA LUMPUR, May 4 (Reuters) - Palm oil inventories in
Malaysia, the world's second-largest producer, are forecast to
slide to their lowest in six months, as exports and domestic
consumption outpaced production, according to a Reuters poll.  
    Malaysia's palm oil stockpiles at the end of April are
forecast to fall 4.1 percent from March to 2.23 million tonnes,
a fourth straight month of declines, according to the median of
nine estimates from planters, traders and analysts surveyed by
    Falling stocks could support benchmark palm oil futures
, which have fallen since early April on slowing
demand. Palm was up 0.2 percent at 2,337 ringgit ($594.35) a
tonne at the midday break on Friday, and has fallen 1.9 percent
so far this week.
    "Production and imports were lower than exports and domestic
consumption, which is expected to rise on biodiesel production,"
said a Kuala Lumpur-based trader, as gains in the price of
gasoil have made it more favourable to use palm oil for
biodiesel production. 
    Palm oil is used in the production of biodiesel, which
replaces some petroleum-based diesel in the fuel supply. Rising
gasoil prices in recent weeks have made biodiesel more
economical. Its price premium over palm widened to $52 per tonne
on Friday, its highest in 3-1/2 years. 
    The rising domestic consumption caused palm inventories to
decline despite falling exports. Exports in April are forecast
to drop 5.5 percent from March to 1.48 million tonnes, according
to the poll. MYPOME-PO
    While key markets like China and Pakistan bought more palm
oil, overall demand from top edible oils importer India fell,
said Kenanga Research plantations analyst Voon Yee Ping.
    "We do not expect strong Indian purchasing to continue, as
increased Indian import tariffs come into full effect for the
month," Voon said. 
    India raised import taxes on crude and refined palm oil to
their highest levels in over a decade in March to support local
farmers by making domestic oilseeds more competitive.
    Meanwhile, April production is forecast to remain flat at
1.57 million tonnes, following a surge in March when output for
the month rose its highest since 2000. MYPOMP-CPOTT 
    "April will see normalizing output," said William
Simadiputra, a DBS Vickers analyst. "It will then rise a little
in May, catching up on targets before the Eid-Al-Fitr festival
holidays," he said, adding that May output should rise to 1.57
million tonnes. 
    Official data will be released by the Malaysian Palm Oil
Board after 0430 GMT on May 10. 
    The median figures from the Reuters survey imply Malaysian
consumption of 225,685 tonnes in April. 
    Breakdown of April estimates (in tonnes):
                         Range              Median
 Production      1,450,000 - 1,684,100     1,574,000
 Exports         1,380,000 - 1,500,000     1,480,000
 Imports            15,000 - 50,000         37,500
 Closing Stocks  2,130,000 - 2,378,700     2,229,273
* Official stocks of 2,323,458 tonnes in March plus the above
estimated output and imports give a total April supply of
3,934,958 tonnes. Based on the median of the exports and closing
stocks estimates, Malaysia's domestic consumption in April would
be 225,685 tonnes.

($1 = 3.9320 ringgit)

 (Reporting by Emily Chow; Editing by Christian Schmollinger)
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