Palm oil stocks expected to continue downtrend
KUALA LUMPUR: Palm oil stocks, which fell 1.9 per cent last month, are expected to continue their downtrend in coming months, driven by strong export demand, says Rabobank Agri Commodity Market Research.
"We believe the drawdown will continue based on our first quarter price forecast of RM2,400 per tonne. However, we expect it to not push stocks below the five-year average. We maintain expectations that prices this year will remain lower year-on-year (y-o-y)," Rabobank said in a research report.
In the coming months, the seasonally slow palm oil production, palm oil's low price and reduced supplies of alternative vegetable oils should allow prices to rise in the second quarter this year.
It said China's stricter quality requirements, effective January this year, have not appeared to have impeded Malaysia's palm oil exports to the country, which grew 23 per cent y-o-y to 268,000 tonnes and is likely to remain strong as other vegetable oil import supplies were limited.
Malaysia's palm oil exports to India, which rose 57 per cent to 172,000 tonnes in January, is also expected to continue until their rapeseed harvest is underway in March.
"Palm oil exports during the first 10 days of February were reported up 25 per cent month-on-month to 429,000 tonnes and at the same time, we expect production to continue declining. We expect Malay-sia's palm oil output to fall an avera-ge of two per cent y-o-y during the next six months," it added. Bernama