Lower figures: The consensus by industry analysts was for a 3 decline to 1.61 million tonnes. – Reuters
MPOB: Crude palm oil stocks see a marked decline after falling by 2.26%
PETALING JAYA: Malaysia’s palm oil inventory rose by 0.2% in December amid lower export figures despite initial expectations of a decline, according to the latest figures by the Malaysian Palm Oil Board (MPOB).
According to MPOB, total palm oil stocks rose slightly to 1.67 million tonnes compared with 1.66 million tonnes in November last year.
However, crude palm oil (CPO) stocks saw a marked decline after falling by 2.26% to 876,647 tonnes from 896,936 tonnes in November. Processed palm oil stocks rose 3% to 788,741 tonnes from 765,875 tonnes the month before.
The latest figures mark a fourth consecutive month of gains in the palm oil inventory, which confounded initial forecasts.
According to a survey by Reuters, the consensus by industry analysts was for a 3% decline to 1.61 million tonnes instead of the rise in stocks for the month.
The lower demand for December could be attributed to higher CPO prices recently. Physical settlement prices for the commodity broke the RM3,200-per-tonne mark last month, or the highest in four years.
For the year, total CPO production fell 13% to 17.32 million tonnes from 19.91 million tonnes in 2015 due to the lingering effects of El Nino.
Total CPO exports for the year saw a large dip to 3.82 million tonnes from 5.28 million tonnes a year ago, which represents a decline of 27%.
On the other hand, palm oil exports declined by 7.48% to 1.27 million tonnes in December from 1.37 million tonnes in November.
Biodiesel for December fell to just 55 tonnes compared with 13,568 tonnes in November.
Despite a drop in demand, India remained the top export destination for the year with 2.83 million tonnes. The country imported 3.69 million tonnes in 2015.
Similarly, demand from China fell to 1.88 million tonnes from 2.38 million tonnes the year before.
Stocks of processed palm oil rose by 2.99% to 788,741 tonnes for December compared to 765,875 tonnes the month before.
At the same time, CPO production declined to 1.47 million tonnes from 1.57 million tonnes in November.
Malaysian planters are expected to benefit from higher CPO prices over the past few months prior to an expected strong recovery in production during the second quarter.
For 2016, CPO prices averaged RM2,657 per tonne compared to RM2,191 the year before, according to Bloomberg data.
The current three-month benchmark forward contract for the April delivery was last traded at RM3,074 yesterday.