- Malaysian Palm Oil Board (MPOB) has released the country’s
palm oil statistics for April 2012. Palm oil inventory in Malaysia declined for
the second consecutive month from 1.95mil tonnes in March to 1.85mil tonnes in
April. The fall in inventory in April was due to higher internal usage.
- We estimate that 47,000 tonnes of palm oil were used
internally in April compared with an excess supply of 10,463 tonnes of palm oil
in March, which may have been imported into the country.
- Average CPO price was RM3,481/tonne in April 2012, 6%
higher than the average of RM3,278/tonne recorded in the previous month. In the first four months
of the year, average CPO price was RM3,262/tonne. Year-to-date, CPO price has averaged
RM3,362/tonne.
- Based on yesterday’s closing prices of soybean oil and
CPO, the discount between the two commodities is 6.3%. In March, the average
price discount was 10.5% compared with the five-year average of 15.8%. The
price discount between soybean oil and CPO for the month of April has not been
disclosed by MPOB yet.
- Contrary to our expectations that the country’s palm oil
output would flatten or decline, palm oil production expanded 5.1% MoM to
1.27mil tonnes in April. Although palm oil production was stagnant MoM in Sabah
in April, this was more than compensated by increases of 6.8% in output in
Peninsular Malaysia and 8.4% in Sarawak.
- Stock usage declined in line with the fall in palm oil
inventory in April. Stock usage shrank from 1.47x in March to 1.39x in
April.
- As opposed to the 9% to 10% MoM growth in exports, which
were reported by SGS and Intertek, MPOB reported that exports of Malaysian palm
oil were flat in April compared to March.
- We believe that this was probably due to an issue of
timing recognition. Some of the palm oil exports could have been shipped in
April but recognised in the following month.
- The MoM fall in April was mainly due to a 20.6% decline in
exports to the Netherlands. Demand from other countries remained positive.
China bought 6% more palm oil in April compared to March while exports to India
and Pakistan climbed 104% and 25% MoM respectively.
- China was the largest buyer of palm oil from Malaysia,
accounting for 20% of the country’s exports from January to April 2012. The
other main importers of Malaysian palm oil were India, which bought 11% of the
country’s palm oil and the Netherlands, which accounted for 7% of the country’s
exports in the first four months of the year.
- We are positive on the plantation sector. We reckon that
palm oil prices would remain resilient underpinned by slower supply growth of
CPO in Malaysia and Indonesia. Additionally, soybean prices are expected to be
supported by lower output resulting from the drought in South America.
Source: AmeSecurities
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