Lower palm oil stocks and higher exports to support CPO prices


Malaysian palm oil futures declined on Monday evening, charting a second session of decline in three, as the market was pulled down by weaker demand and overnight losses in U.S. soyoil.

PETALING JAYA: Lower-than-expected palm oil stocks on the back of higher-than-expected exports in July 2018 is expected to be supportive of crude palm oil (CPO) prices in the short term.

Malaysia’s palm oil stocks grew 1% month-on-month (m-o-m) and 24% year-on-year (y-o-y) to 2.22 million tonnes as at end-July 2018, coming in 5% and 9% below Bloomberg and Reuters’ poll estimates.

CGS-CIMB Research noted that the lower-than-expected stockpile against forecasts was mainly due to higher-than-expected exports and domestic disappearance.

It said the lower stockpile was supportive of CPO prices in the short term, although partially offset by the upgrade in US soybean crop estimates to a new record by the US Department of Agriculture last Friday.

The research house noted that exports grew 7% m-o-m to 1.2 miliion tonnes in July, above its expectations mainly due to stronger demand from EU and other countries, which more than offset weaker demand from China and India.

It maintained its “neutral” stance on the agribusiness sector.

Moving forward, it said the key factors that could impact the industry in the coming months was the demand for soybean following China’s 25% import duty on the edible oil from the US, the development of El Nino conditions and Indonesia’s plans to raise the biodiesel mandate to 20% by Sept 1, 2018.

MIDF Research also expected the latest inventory data to be positive on CPO prices, and maintained its average CPO price forecast of RM2400 per tonne for 2018.

The research house however, expected the increase in seasonal production to be weaker than usual after production in July represented the third y-o-y decline, down 18% y-o-y.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

Business , plantations , palm oil , CPO , exports , stocks , price ,

   

Next In Business News

RHB group exits asset management business in Indonesia
DNeX completes Silterra acquisition
Serba Dinamik nominates Nexia as new external auditor
Strong demand for handformers lifts ES Ceramics' revenue and profit
KLCI falls 10.91 points as regional markets slip
The path to net zero should be an integrated initiative
RAM: No credit concerns due to Edra Energy's delay in completing power plant
Gross fixed capital formation shrank 14.5% to RM281.1b
China shares tumble on regulatory clampdown; education firms selloff heavily
Oil falls US$1/bbl as coronavirus, floods threaten demand

Stories You'll Enjoy


Vouchers