CIMB: Malaysian April palm oil inventory seen rising 3%, CPO at RM2,500-RM2,800

by **Cals** Fri 11 Apr 2014, 14:30

Business & Markets 2014

Written by Jonathan Gan of theedgemalaysia.com

Friday, 11 April 2014 10:51

KUALA LUMPUR (Apr 11): Malaysian palm oil inventory may register a month-on-month rise of 3% in April this year, according to CIMB Investment Bank Bhd.

This is in anticipation that improving weather condition in Sabah and Sarawak will boost fresh fruit bunch (FFB) yields, CIMB analyst Ivy Ng wrote in a note.

Ng said CIMB had projected crude palm oil (CPO) to trade at between RM2,500 and RM2,800 a tonne in April.

“For April 2014, we project that stocks could rise by 3% to 1.73 million tonnes and CPO prices to trade in the tighter range of RM2,500-2,800 with the key driving factors being weather developments in the major planting areas of oil palm and oilseeds," said Ng.

The CIMB report follows the release of Malaysian oil palm sector data for March by the Malaysian Palm Oil Board (MPOB).

MPOB said CPO output rose about 17.35% to 1.5 million tonnes in March from 1.3 million tonnes in the preceding month.

Palm oil inventory, comprising CPO and procesed palm oil, rose about 1.86% to 1.69 million tonnes from 1.66 million tonnes. Palm oil exports, however, fell 7.98% to 1.2 million tonnes from 1.4 million tonnes.

Ng said the higher-than-expected stockpile was negative for CPO prices as it suggested that palm oil supplies were not as tight as the market had anticipated.

She said the improvement in rainfall within key planting regions in late March had helped boost FFB yields.

Ng maintained CIMB's “neutral” view on the sector.

CIMB's top picks for the regional plantation sector include Ta Ann Holdings Bhd and Singapore-listed Wilmar International Ltd.

Malaysia’s PPB Group Bhd owns an 18% stake in Wilmar.