• Inventory inched 1.7% mom to 1.73m tonnes

• CPO production increased 8.4% mom to 1.40m tonnes

• Palm oil exports surged 9.2% mom to 1.18m tonnes.

• Maintain Neutral on the sector with target average CPO price of RM2,480/MT for 2020.

Closing stocks increase slightly to 1.73m tonnes in March

Inventory in March 2020 inched 1.7% mom to 1.729m tonnes (-41% yoy) as production increased 8.4% whilst imports surged 12.8% mom to 75.3k tonnes from February 2020. Notably, stocks of PPO (processed PO) increased 5.9% mom to 899K tonnes aided by 14.2% increase in CPO stocks from Peninsular of 440.7k tonnes. However, CPO stocks from Sabah and Sarawak decreased 19.2% and 11.4% mom respectively to 246k tonnes and 142k tonnes. We expect stock level to remain at 1.7m-1.8m tonnes in April/May 2020 before gradually increasing from June 2020 onwards.

Export surged 9.2% to 1.18m tonnes

Palm oil export volume increased 9.15% mom to 1.181m tonnes in Mar 2020 as major importing countries like EU, Pakistan, Japan, Vietnam and South Africa increased their intake of PO. Nonetheless, we believe PO exports in the coming months would be muted due to logistic issue in most major importing countries as a result of lockdowns or movement restriction order.

Source: BIMB Securities Research - 10 Apr 2020