'Palm oil refiners to expect more headwinds'

Malaysian palm oil refiners can expect more headwinds in the third
quarter of the year as a significant increase is anticipated in
Indonesia's refining capacity, says HwangDBS Vickers Research.

It
said palm oil processors in Indonesia were expected to consume more of
their home-grown commodity in the third quarter and this would
progressively deplete inventories.

"For this reason, refining
capacity utilisation in Malaysia could drop in the near-term and
reverse the inventory downtrend observed thus far," it said in a
research note.

On Malaysia's crude palm oil (CPO) production, it
said May's output of 1.383 million tonnes was below the research
houses's forecast of 1.67 million tonnes.


However, its said stocks were expected to grow 26 per cent in June to
1.746 million tonnes in anticipation of yield recovery in fresh fruit
bunches.

Furthermore,
it said a weaker rupiah could shift international demand from Malaysia
towards Indonesian refined products, it said. -- Bernama