• Inventory increased 1.34% mom to 3.05m tonnes

• CPO production declined 11.1% mom to 1.54m tonnes

• Palm oil exports eased 21.4% mom to 1.32m tonnes

• Maintain Underweight on the sector with target average CPO price for 2019 of RM2,280/MT.

Closing stocks increased slightly to 3.05m tonnes

Malaysia’s Feb 2019’s inventory pile up slightly by 1.34% mom to 3.05m tonnes as exports tumbled 21.4% mom to 1.32m tonnes. The higher inventory also reflects the 15.7% rise in palm oil import to 94.2m tonnes from 81.5m tonnes the month before. Notably, stocks of CPO increased by 2.3% mom (+22.8% yoy) to 1.92m tonnes during the period – with all states recorded higher inventory except for Sarawak (-4% mom). On the other hand, stocks of PPO decreased 0.2% mom to 1.13m tonnes although still higher by 23.3% yoy from 916k tonnes recorded in Feb18. We project stock level shall continue to remain high before gradually decreasing in Mar-June 2019 period to 2.6m tonnes.

Export slumped 21.4% mom

Palm oil export volume dropped to 1.321m tonnes vs 1.681m tonnes recorded in January 2019 (+6.25% yoy) as China, Pakistan, EU and USA registered lower demand. China recorded the biggest drop of 74.8% followed by USA (-25.6%), EU (-22.3%), and Pakistan by -3.7%.

Source: BIMB Securities Research - 12 Mar 2019