KPBN News

Malaysian Stockpiles Jump, Pressuring Palm Oil Prices



At the close of trading on Monday (11/7) futures contracts for CPO for delivery September 2016, the active contract on the Bursa Malaysia, fell 2 points or 0.09% to 2,359 ringgit per ton. This figure shows that throughout the current year, the price has already dropped 12.33%. According to a Bloomberg survey median that involved eight respondents from analysts, contractors and traders, CPO stock in Malaysia stood at 1.72 million at the end of June, up 4.2%. Meanwhile, CPO production leapt 10% to 1.49 million tons, or increased 4.9%. In terms of exports, overseas shipments are predicted to decrease by 5.5% to 1.21 million tons, or the lowest level since 2008. The Malaysian Palm Oil Board (MPOB) itself will release the official data on Tuesday (12/7/2016). The Malaysian Palm Oil Association that manages a number of producer companies predicted CPO production last month would increase 10.5% to 1.51 million tons. This is based on the plant’s harvesting cycle and the lackluster demand for products made from palm oil. The decreased exports are predicted to be because the Ramadan holiday period did not cause a spike in consumer demand. The main reason for this is the way purchases dropped in India, with its CPO import rate falling by 46% in June to 195,105 tons. Ivy Ng, Regional Head of Plantations at CIMB Investment Bank Bhd, said that negative sentiment toward CPO meant the price this month will lie in the range of 2,300-2,600 ringgit per ton. The higher palm oil production is a sign that the poor weather from El Nino is improving. Alan Lim, an analyst for MIDF Research, said in his research publication that CPO supplies in Malaysia, as the second largest palm oil producer in the world, reached 1.83 million tons at the end of June due to weakening demand. Last month’s export data showed a decrease of 10%. Despite that, supply is still under the 2 million ton psychological threshold, so it continues to support price stability. “We are maintaining the assumption that the average CPO price for 2016 will reach 2,450 ringgit per ton, up 14% from 2015, which was valued at 2,153.5 per ton,” he explained in the study that was cited by Bisnis.com on Monday (11/7/2016). Source: Bisnis Indonesia