• Inventory surged 18.3% mom to 2.05m tonnes

• CPO production increased 18.3% mom to 1.65m tonnes

• Palm oil exports improved 4.4% mom to 1.24m tonnes.

• Maintain Neutral on the sector with target average CPO price of RM2,300/MT for 2020. 
 
 
Source: BIMB Securities/ MPOB 
Closing stocks increased further to 2.05m tonnes in April 
Inventory in April 2020 increased 18.3% mom to 2.045m tonnes (-25% yoy) as higher production outweigh the 4.4% increase in export and 29% drop in imports of 56.6k tonnes from 79.2k tonnes in Mar 2020. Notably, both stocks from CPO and PPO (processed PO) increased 26.0% and 11.1% respectively to 1.046m tonnes and 1.0m tonnes in April 2020, with all states recorded higher stocks. We expect stock level to remain elevated at this current level as production entering the productive season cycles. 
 
Export surged 4.4% to 1.24m tonnes  
Palm oil export volume increased 4.38% mom to 1.236m tonnes in April 2020 as major importing countries like India, China, EU, Iran and South Korea increased their intake of PO. Nonetheless, we believe exports of PO in the coming months would likely remain under pressure as Covid-19 pandemic prolongs with many countries adopting a slow approach in lifting restrictions and borders.