MPOB’s Jan 2024 stockpile hit a 6-month low at 2.02mt on seasonal decline in output while exports remained resilient ahead of Ramadhan demand. Maybank IB posits that stockpile will ease below 2.0mt by end-Feb, and reiterates its view that CPO price may briefly go above MYR4,200/t in Feb/Mar.
Thereafter, CPO price should trend lower by mid-2024 due to availability of new South American harvests, and anticipation of CPO output recovery in 2H24. Jan stockpile at 6-month low on seasonal decline MPOB’s Jan 2024 stockpile eased seasonally to 2.02mt, and came in below street’s estimates of 2.09mt. The lower stockpile was due to resilient Jan exports of 1.35mt while production continues its seasonal decline to 1.40mt.
Meanwhile, Jan’s consumption eased somewhat MoM to 0.35mt but imports dipped sharply. Mixed start to Feb 2024’s prelim exports estimates The preliminary Malaysian export estimates for shipments in the first 10 days of Feb 2024 were rather mixed as independent cargo surveyors such as Amspec showed MoM contraction to 306,432t whereas Intertek showed a marginal growth to 358,365t respectively. The house reckons that if Feb exports can be sustained around 1.1mt-1.2mt, there will be further inventory drawdown to below 2.0mt by end-Feb. This will help further strengthen CPO price in the short term on tightness in supply.
USDA’s latest projection shows tightness in oils easing USDA, in its latest Feb 2024 issue, has marginally trimmed its marketing year 2023/24F forecasts of the global 7 major oilseeds production by 0.1% or 0.78mt to 659.4mt, while marginally raising its 2022/23E estimates by 0.4% to 637.2mt. Notwithstanding the latest revision of a marginal decline in Brazil’s soybean prospects, the 7 major oilseeds’ production is still projected to grow by 3.5% YoY growth in 2023/24F; led by soybean.
Meanwhile, the 7 major oilseeds’ stock-to-usage ratio (SUR) is revised higher to 20.7% (previously 20.4%; 2022/23F: 19.6%) on higher brought forward stocks. The revised SUR is considered relatively ample compared to historical 5-yr average of 20.0%. As for the 9 major vegetable oils, USDA has also marginally trimmed its production forecasts by 0.1% or 0.2mt to 222.8mt, but projected a higher SUR of 14.3% (previously 13.9%) for 2023/24F owing to higher brought forward stocks. The revised SUR is broadly on par with its 5-yr average of 14.6%. Maybank maintains its CPO ASP forecast of MYR3,700/t for 2024E, which is below 2023’s MYR3,810/t, premised on (i) good South American soybean harvest, and (ii) anticipated lower YoY CPO unit cost.
