Friday, January 9, 2009

Malaysia Dec palm stocks seen down 13.3pc: Poll

MALAYSIAN palm oil stocks probably tumbled 13.3 per cent in December from a record the month before, as a low output cycle gathered pace and exports rose, a Reuters poll showed today.

Inventories in the world’s second largest producer of the vegetable oil eased to 1.97 million tonnes from a record 2.27 million tonnes in November, according to a median estimate of five plantation houses, the first dip in four months.

Output fell 9.6 per cent to 1.50 million tonnes in December, the lowest in six months, which poll contributors also attributed to heavy rains which disrupted some harvesting in key palm growing areas in central and eastern Malaysia.

Shipments likely jumped 20.7 per cent to 1.63 million tonnes as China stepped up buying ahead of the Chinese New Year festival at the end of this month.

“The last two years have seen some good production growth but finally a combination of the low production cycle and heavy rains knocked down stock levels,” said a contributor to the poll.

“In 2009, the La Nina weather problem could make production an issue with extraction rates and yields getting significantly affected with increased rains.”

La Nina, or “little girl” in Spanish, refers to an unusual cooling of sea surface temperatures in the Pacific Ocean which tends to bring increased wet weather to Southeast Asia.

Coupled with government efforts to bring down stock levels through replanting schemes and biofuel mandates, palm oil inventories could reach 1.5 million tonnes within the next six months, plantation officials said.

“Everything seems to be coming together in terms of managing stock levels and prices, plantation firms have been reducing fertiliser use since November and that affects yields,” said an official from a leading plantation house.

EXPORT UPSWING?

Palm oil futures have bounced about 40 per cent since the October 28 low of RM1,331, prompting big buyers in Asia and Europe to snap up shipments before prices go any higher.

“China is buying normally for Chinese New Year while India and Pakistan are taking on shipments that were deferred earlier on,” said another poll respondent.

However, slowing global economic growth will keep the outlook for exports cloudy in the coming months as buying for the Asian festival season starting in September will only kick off in May or June.

“There is a huge uncertainity out there,” another poll respondent said. “China will slow down purchases after January, India will just buy the usual quantities, there is not going to be any additional growth.”

The Reuters poll also showed that Malaysia in December probably imported 50,000 tonnes of mostly crude palm oil from top producer Indonesia.

Industry regulator the Malaysian Palm Oil Board (MPOB) will unveil end-December palm oil stocks, exports and production data on Monday. - Reuters

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