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The STAR

Palm oil inventory down 13% in March

PALM oil inventory as at end-March fell almost 13% to 1.4 million tonnes from 1.6 million in February, according to statistics released by the Malaysian Palm Oil Board (MPOB).

This is the fourth month that stockpiles continue to decline as the Government initiated a replanting scheme to encourage planters to chop down oil palm trees over 25 years old.

Production increased 7.4% to 1.3 million tonnes in March compared with 1.2 million the month before. Exports of palm oil rose month-on-month for the first time this year. March exports were 0.2% higher at 1.26 million tonnes versus 1.257 million tonnes in February.

A survey by independent surveyor Intertek said palm oil exports rose 8% to 399,703 tonnes in the first 10 days of this month compared with 369,265 tonnes in the corresponding period in March. Price of three-month crude palm oil (CPO) futures was higher by RM30 per tonne at RM2,299.

“CPO prices have built in a lot of optimism. Yesterday’s run-up was in anticipation of lower inventory,” says OSK Research Sdn Bhd analyst Alvin Tai.

Production from April onwards is anticipated to outpace exports, hence inventory may pick up again in the second quarter, he tells StarBizWeek. “We might see resistance to further declines in palm oil stockpiles,” Tai adds.

Meanwhile, the US Department of Agriculture, in a report published last month, said soybean planting prospects this year were estimated at 76 million acres, which was lower than consensus estimate of 79.2 million acres and slightly higher than the acreage planted last year.

Soybean stock as at March 1 was 1.3 billion bushels, which was marginally lower than the expected 1.32 billion bushels.

A foreign research house says the planting prospects will have a positive impact on sentiment for edible oil prices in the short term.

“However, in the mid term, the situation in the edible oils market is nowhere as tight as it was in 2007, and prices will depend on the extent of demand recovery and weather conditions during the actual planting season in the US,” it adds.