Malaysia: Oilseeds and Products Update

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Tuesday, May 06, 2008

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Malaysia: Oilseeds and Products Update - April 2008

MALAYSIA - This is a GAIN report on Malaysia's oilseed and products update prepared by the USDA Foreign Agricultural Service (FAS).

Report Highlights

Malaysia's crude palm oil (CPO) production rose 5.5 percent to 1.3 MMT in March. The increase in palm oil exports was more than the increase in palm oil output, resulting in a drop in carryout stocks at the end of March. CPO prices dipped after experiencing a rollercoaster ride in the month of April. As the oil palms recover strongly from biological stress, Post has revised CPO production to 17.4 MMT for 2007/08.

Executive Summary

Production

The Malaysian Palm Oil Board (MPOB) reported that total crude palm oil (CPO) production increased by 5.5 percent to 1.3 MMT in March 2008. Output in Peninsular Malaysia rose 7.8 percent while East Malaysia’s production increased by 2.1 percent. Compared to March 2007, output during March 2008 was 20 percent higher. The strong recovery of palms from biological stress in the past two years is reflected in the strong increase in yields. Post has revised CPO production to reach 3.9 MMT during the Jan-Mar period and 4.3 MMT for the Apr-Jun quarter. Total CPO output is likely to hit 17.4 MMT in 2007/08.

Price

Palm oil prices experienced a roller-coaster ride during the month of March. Contributing factors included the fluctuating global soyoil prices, record crude oil prices, predictions of higher CPO output during the Apr-Jun period, expectation of Indonesia lowering its export tax on palm oil and the appreciating Malaysian Ringgit. Overall, the monthly average delivered CPO price dropped from RM3,965/MT in March to RM3,413/MT in April. For comparison, the average CPO price for April 2007 was only RM2,209/MT. Refined/Bleached/Deodorized (RBD) Palm Oil FOB average price also dropped from US1,317/MT in March to US$1,250/MT in March.

Stocks

An increase in palm oil exports more than offset the increase palm oil production and resulted in a drop in carryout stocks to 1.8 MMT at the end of March. With an expected strong demand for exports in the Apr-Jun quarter, Post expects the stock level to further decrease to 1.7 MMT by the end of June.

Trade

Preliminary official report shows PO exports increased by 17 percent to 1.2 MMT in March. According to SGS Cargo Surveyor, PO exports rose 3 percent to 1.07 MMT during the first 25 days of the month of April.