• Malaysian Palm Oil Board (MPOB) has released the country’s palm oil statistics for May 2015. Palm oil inventory in Malaysia rose by 2.5% from 2.19mil tonnes in April to 2.24mil tonnes in May. This was above consensus estimates of 2.12mil tonnes for the month of May.
• The climb in palm oil inventory was due to a decline in domestic disappearance and growth in production, which could not be offset by a surge in exports.
• Domestic disappearance of palm oil decreased from 194,620 tonnes in April to 142,080 tonnes in May. In the first five months of the year, domestic disappearance of palm oil amounted to 917,960 tonnes. This was 8.3% lower than the one million tonnes recorded in the same period last year.
• Average price discount between soybean oil and CPO widened from 11.7% in April to 15.7% in May. On average, CPO was 12.6% cheaper than soybean oil from January to May 2015. This was close to the five-year average of 13.9%. The large price discount between the two commodities should encourage more buying of palm oil from China and India.  CPO production expanded by 6.9% MoM and 9.3% YoY to 1.81mil tonnes in May. Peninsular Malaysia recorded a CPO output increase of 4.2% MoM in May while CPO production in Sabah climbed by 11.5%. CPO output in Sarawak increased by 8.1% from 284,518 tonnes in April to 307,473 tonnes in May.
• In the first five months of the year, CPO production amounted to 7.28mil tonnes in Malaysia. This was 2.8% weaker than the 7.49mil tonnes recorded in 5M2014.
• Inventory of crude palm oil inched up by 1.0% MoM to 1.29mil tonnes in May while inventory of processed palm oil increased by 4.6%. Inventory of processed palm oil in Peninsular Malaysia climbed by 8.1% from 586,091 tonnes in April to 633,497 tonnes in May while Sabah recorded a 6.0% decline. Inventory of processed palm oil in Sarawak expanded 6.3% MoM to 125,403 tonnes in May.
• Palm oil exports from Malaysia surged by 37.3% MoM to 1.61mil tonnes in May. Palm oil exports to China jumped by 36.9% from 262,713 tonnes in April to 359,660 tonnes in May while India imported 292.3% more palm oil. USA received 41.3% fewer palm oil shipments in May while Netherlands’ palm oil imports expanded by 211%.
• In the first five months of the year, palm oil exports to China amounted to 1.04mil tonnes. This was 15.2% lower than the 1.2mil tonnes achieved in 5M2014. Although China’s buying has picked up on a monthly basis due to the upcoming festive period, the country’s demand for palm oil is still weak compared with last year.
• Biodiesel exports improved from 186 tonnes in April to 1,314 tonnes in May. Biodiesel exports amounted to 40,607 tonnes in 5M2015 versus 30,828 tonnes in 5M2014.

Source: AmeSecurities Research - 11 Jun 2015