June 5, 2018 / 9:46 AM / 3 months ago

PREVIEW-Malaysia's May palm oil stockpiles seen hitting 8-month low - survey

    * May end-stocks seen falling to 2.09 million tonnes -
survey
    * Output seen down from previous month at 1.49 million T -
survey
    * Exports forecast to drop to 1.4 million tonnes - survey
    * Malaysian Palm Oil Board data due on June 11

    By Emily Chow
    KUALA LUMPUR, June 5 (Reuters) - Palm oil inventories in
Malaysia, the world's second-largest producer, are expected to
slip to an eight-month low in May, weighed down by a decline in
production, according to a Reuters poll.
    Malaysia's palm oil stockpiles at end-May are forecast to
fall 3.8 percent from April to 2.09 million tonnes. MYPOMS-TPO
    This would be its fifth consecutive month of declines,
according to the median of 8 estimates from planters, traders
and analysts surveyed by Reuters.
    Easing inventories could support palm oil futures,
which have been declining due to lean demand. Buyers typically
stock up palm oil ahead of the Muslim fasting month of Ramadan,
which began mid-May this year.
    Palm was last down 0.1 percent at 2,406 ringgit ($605.44) a
tonne on Tuesday afternoon.
    The poll's respondents expect production in May to fall to
1.49 million tonnes, a drop of 4.4 percent from April, in a
second consecutive month of declines. MYPOMP-CPOTT
    The decline in production is attributed to a higher number
of public holidays and Ramadan, which also slows down workers'
productivity.
    "May 1 was a holiday and we had some days off for elections
before Ramadan started," said Ivy Ng, regional head of
plantations research, CIMB Investment Bank, adding that
normalizing yields were contributing to a weaker output.
    "January to March saw a high production base... The
improvement in yield for that many months cannot sustain so now
it is tapering off. We cannot expect high growth to sustain
throughout the rest of the year."
    Meanwhile, exports in May are expected to fall 9.2 percent
to 1.40 million tonnes, their lowest in three months, according
to the poll. MYPOME-PO
    "India's rupee is weakening and Indonesian palm oil prices
are cheaper," said a Kuala Lumpur-based trader.
    "Looks like bad exports are here to stay."
    Apart from high taxes, a weakening rupee in India, the
world's top importer of palm oil, has further affected buyers'
ability to import palm oil, said traders and industry players.

    Also weighing on palm demand is Malaysia's resumption of
crude palm oil export duties in May at a 5 percent rate, after
four months of tax exemptions in a bid to encourage demand and
reduce stockpiles.
    Official data will be released by the Malaysian Palm Oil
Board ‪after 0430 GMT on June 11.
    The median figures from the Reuters survey imply Malaysian
consumption of 209,235 tonnes in May.
    Breakdown of April estimates (in tonnes):
                         Range              Median
 Production       1,386,887-1,698,600      1,490,000
 Exports          1,320,000-1,556,800      1,399,837
 Imports             30,000-47,500          35,600
 Closing Stocks   2,002,714-2,172,300      2,090,771
 
    * Official stocks of 2,174,243 tonnes in April plus the
above estimated output and imports give a total May supply of
3,699,843 tonnes. Based on the median of exports and closing
stocks estimate, Malaysia's domestic consumption in May would be
about 209,235 tonnes.

($1 = 3.9740 ringgit)

 (Reporting by Emily Chow; Editing by Sherry Jacob-Phillips)
  
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