Malaysia’s CPO production in Oct20 was surprisingly lower, declining by 7.8% mom to 1.72m MT. We believe this was partly due to heavy rainfall that has delayed harvesting and could potentially shift some of the production into November (barring no extreme weather conditions affecting harvesting process). Production was lower in Peninsular, Sabah and Sarawak, down 11.2%, 0.6% and 6.9% mom respectively to 909.7k MT, 444.6k MT and 370.1k MT. For 10M20, Malaysia’s CPO production contracted 4% yoy to 16.3m MT, mainly attributable to weaker production in 1Q20 due to the impact from lagged effect of dry weather in 2019 but started to improve from 2Q onwards. For 2020, we expect Malaysia’s CPO production to be slightly lower, potentially down c. 1-3% yoy (2019: 19.9m MT), due to the lagged effect of the dry weather in 2019 and lagged effect of lower fertilizer application.
Malaysia’s Oct20 palm-oil product exports increased by 3.8% mom to 1.67m MT, as some of our main buyers like India, Pakistan and the Philippines bought more of our products and offset the drop in demand from countries like China and the EU. Exports to India, Pakistan and the Philippines were up by 13.1%, 33.2% and 7.5% mom, respectively to 423.8k MT, 78.8k MT and 73.1k MT. The increase in purchases of palm-oil products from our top buyer, India, could partly be attributable to the Deepavali festivity on 13 November. We believe demand has improved in 2H20 as compared to 1H20 due to countries restocking their edible oil inventories as their lockdowns ease and the re-opening of their HORECA (Hotels/Restaurants/Catering) businesses. Nevertheless, Malaysia’s total exports in 10M20 declined by 7.8% yoy to 14.4m MT.
Malaysia’s palm-oil inventory in Oct20 declined by 148.6k MT (or -8.6%) mom to 1.57m MT, the lowest level since Jun17 (contrasting with our earlier expectations of an increase). This is due mainly to lower-than-expected production, while exports remained healthy. We expect Malaysian palm-oil exports supply in the coming months to drop, partly attributable to the current low stocks and seasonally declining production due to monsoon season.
Source: Affin Hwang Research - 11 Nov 2020
Created by kltrader | Jan 03, 2023
Created by kltrader | Sep 30, 2022