Malaysia’s CPO production in Sep20 was higher as expected, rising by 0.3% mom to 1.87m MT. Production was higher in Sabah, up 11.8% mom to 447.1k MT, but lower in Peninsular Malaysia and Sarawak, down by 1.4% and 6.3% mom respectively to 1.02m MT and 397.4k MT. For 9M20, Malaysia’s CPO production contracted 4% yoy to 14.6m MT, mainly attributable to weaker production in 1Q20 due to the impact from the lagged effect of dry weather in 2019 but started to improve from 2Q onwards. We believe that CPO production will remain strong in the next 1-3 months as we enter the peak production period. For 2020E, we expect Malaysia’s CPO production to be lower, potentially down c.1-3% yoy (2019: 19.9m MT), due to the lagged effect of the dry weather in 2019, lagged effect of lower fertilizer application and minimal new plantings of oil palm.
Malaysia’s palm-oil product exports in Sep20 increased by 1.9% mom to 1.6m MT, as some of the main buyers like India, Philippines and Turkey bought more. Exports to India, Philippines and Turkey were up by 13.6%, 50.7% and 77.2% mom, respectively to 374.6k MT, 68k MT and 44.4k MT. Overall, we think demand in 2H20 will be better than 1H20 due to countries restocking their edible oil inventories as their lockdowns ease and the re-opening of their HORECA (Hotels/Restaurants/Catering) businesses, but not as strong as 2H19 as fewer gatherings/events, higher unemployment levels and lower disposable income will lead to lower yoy consumption of global edible oils. Malaysia’s total exports in 9M20 declined by 8.9% yoy to 12.8m MT.
Malaysia’s palm-oil inventory in Sep20 increased by 21.1k MT (or +1.2%) mom to 1.73m MT. This is the second consecutive month of increase as total production continues to exceed consumption in Malaysia. We expect Malaysian palm-oil inventory levels to potentially continue to rise towards year-end as we believe production will remain strong as it enters the peak production period towards Oct/Nov.
Source: Affin Hwang Research - 13 Oct 2020
Created by kltrader | Jan 03, 2023
Created by kltrader | Sep 30, 2022