Malaysian palm oil stockpile expected to fall in MayStaff Writer | June 7, 2017
Malaysian palm oil inventories may have declined by 3% month-on-month (m-o-m) to 1.55 million tonnes in May 2017 in tandem with the rise in crude palm oil (CPO) output and palm oil exports, said CIMB Research.
Asia CIMB Research
Still, plantation companies remain cautious on production prospects for June and "are guiding for flat to negative output growth", the firm said, partly due to June being a shorter month compared with May, which has 31 days, as well as the foreseen drop in productivity as workers prep for the Hari Raya festival in end-June.
Meanwhile, based on export statistics by Societe Generale de Surveillance (SGS) and Intertek Testing Services (ITS), palm oil exports grew by about 16% m-o-m, the research firm added.
CIMB Research noted that it had earlier projected exports to grow 8% m-o-m, but the estimates from SGS and Intertek were supported by stronger demand from India and Pakistan as both countries stocked up ahead of the Ramadhan festival.
Meanwhile, CIMB Research is anticipating a 4% m-o-m increase in fresh fruit bunches output. However, the projection is historically lower than the May average m-o-m growth of 5.7% in the past five years.
"Year-on-year, we expect CPO output to improve by 18% in May 2017. This represents the sixth consecutive month of y-o-y rise in output," CIMB Research said.
"However, our estimated production for May is 11% below May 2015 output, pre-El Nino impact," it said.
The official plantations data will only be released on June 13. In the meantime, CIMB Research is maintaining its neutral stance on plantations sector. ■