KUALA LUMPUR: Palm oil reserves in Malaysia, the world's second largest producer, declined in January for the first time since June, as output fell and shipments decreased less than expected.
Inventories fell 1.9% to 2.58 million tonnes last month from a record 2.63 million in December, Malaysian Palm Oil Board said in a statement yesterday.
Exports jumped 18% to 440,830 tonnes in the first 10 days of this month, from 373,462 tonnes in the equivalent period last month, cargo surveyor Intertek Testing Services said on Feb 9.
Reserves in Malaysia and Indonesia climbed last year as production outpaced demand, pushing down prices by 23%, the most since 2008. Rates may increase this year, as economies rebound in China and India, the world's biggest importers, the Indonesian Palm Oil Association said on Feb 5.
“The good news is that stockpiles seem to be declining while exports appear to be pretty strong,” Ivy Ng, an analyst at CIMB Group Holdings Bhd, said in Kuala Lumpur yesterday.
“This is still considered mildly positive though it's on the high end of the forecast range. Going into February, given that we have a bit of an advantage in terms of CPO (crude palm oil) export tax versus Indonesia, that should help continue to boost demand,” she said.
The drop in reserves to 2.58 million tonnes was less than the median estimate of a decline to 2.53 million tonnes in a Bloomberg survey. Output fell 10% to 1.6 million tonnes, while exports slid 1.6% to 1.62 million tonnes, it said.
Malaysia said in October that it would cut the export tax to between 4.5% and 8.5%, from about 23%, effective Jan 1, to cut record reserves. The tariff for last month and February was set at zero, as the base price was below the threshold that triggers the 4.5% rate.
Indonesia, the biggest grower, fixed the duty at 9% this month.
“The zero export tax is still giving a boost to the market,” Chandran Sinnasamy, head of trading at LT International Futures Sdn Bhd, said yesterday. “After the slowdown in the first half of January, the exports improved on the news that the export tax would remain at zero. February exports look like they may be better.”
Shipments in January were 1.46 million tonnes, 7% less than in December, according to Intertek data released on Jan 31. The decline over the full month compared with a 25% drop over the first 10 days of last month. - Bloomberg
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