Malaysia’s Mar 16 palm oil inventory was largely within market expectation at 1.55m tonnes, up 6.5% mom. The increase came on the back of better production and higher imports despite stronger exports. We expect production to recover gradually going forward, but Apr-Aug 17 production is likely to be lower than 2015’s level. Meanwhile, plantation companies are likely to report weaker qoq results due to lower production, but a better yoy performance. Maintain MARKET WEIGHT.

Source: UOB Kay Hian Research - 11 Apr 2017