Malaysia’s palm oil inventories at the end of February are forecast to shrink as production, hampered by heavy rains and flooding, tumbled to a one-year low, a Reuters survey showed on Friday.
Stockpiles in the world’s second-largest producer are expected to fall 2.74% from January to 2.21 million tonnes, according to the median estimate of ten traders and analysts polled by Reuters. MYPOMS-TPO
Production figures are also expected to decline due to high rainfall and fewer calendar days during the month of February, said Nagaraj Meda, Managing Director of TransGraph Consulting.
Output, which has been declining since October, is expected to slump 8.65% from the previous month to 1.26 million tonnes. MYPOMP-CPOTT
Exports are seen up 0.29% to 1.14 million tonnes. MYPOME-PO
“Considering the risk of Indonesian policy intervention, prices would stay supported in March, reaching 4,500 ringgit ($1,006.04) or higher,” Meda said, adding that prices will fall in the following months as production improves in the second quarter.
Malaysia’s benchmark crude palm oil FCPOc3 contract rose to 4,341 ringgit ($970.49) on Friday.
Indonesia’s policies, the Black Sea grain corridor deal, South America’s soybean harvest and European Union policies will be important factors to watch, Meda said.
The current phase of the Black Sea grains exports deal between Russia and Ukraine ends on March 18. Russia has said it would only agree to an extension if the interests of its own agricultural producers were taken into account.
Ukraine and Russia are the world’s largest sunflower oil producers and a halt to the agreement would constrict global edible oil supply and drive demand for palm oil.
The Malaysian Palm Oil Board (MPOB) is scheduled to release its data on March 10. – Reuters
