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News Admin
 
Date
 28/07/2001
News Provider
 Mahamad Rodzi Abdul Ghani
News Source
 NULL
Headline
 Malaysian palm oil stocks as of end-July possibly

25 July,2001 (Oil World Flash) - Malaysian palm oil prices recoveredyesterday and have a further rally potential in the weeks ahead due to theoutlook for a decline in stocks below the year-ago level. A slowing-downof the production coupled with continued high demand will already reducetotal Malaysian palm oil stocks below the year-ago level as of end-July.Prospects for a slowing-down of production for the remainder of this yearcould lead to a significant drawdown of stocks as end-December. Within thenext 3-5 months palm oil could even rise to a premium vis-a-vis soybeanoil. This would then shift world import demand for vegetable oil also toUS soybean oil, particularly in Oct/March 2001/02.We currently estimate total Malaysian palm oil stocks at 1.02 Mn T as ofend-July, down from the 1.08 Mn T a year ago. As of end-June stocks werevirtually unchanged from the year-ago level at 1.03 Mn T. We estimatetotal palm oil exports from Malaysia at around 870 Thd T in July, which isdown from the near-record 970 Thd T in June but still up sharply from the722 Thd T exported inJuly 2000.Some Malaysian sources indicate that Malaysian stocks as of end-July wouldbe even lower at between 0.97 and 1.0 Mn T. Malaysian palm oil exports forthe first 25 days of July amounted to 721 Thd T, down 8% from a monthearlier (according to data supplied by Intertech Testing Services thismorning), but still up sharply from last year. Very big exports took placeto the EU and India.The slowing-down of the Malaysian palm oil production will be due to adecline in the biological yield cycle (partly linked to the previousfertilizer cut) but also to a intensi-fied cuttings of old palm trees. Wereported last week that 175 Thd ha of old trees have been registered forreplanting within the government programme launched earlier this year tostimulate the necessary replanting which had been postponed and delayed inpreceding years. The government is supporting the replantings with asubsidy of Ringgit 1000 per hectare. Under current regulationsthese replantings must occur until end-December. It is possible, however,that this date might be pushed forward until next year.Dryness has become a problem in several palm oil growing areas of West andEast Malaysia. Rainfall was deficient in May with only an average 71% ofnormal in West Malaysia and 63% of normal in Sabah. According to tradereports it remains drier than usually in June and the first two weeks ofJuly. The situation must be ob-served closely, because continued drynesswould affect the trees and have an impact on production in the secondhalf of next year and early 2003.

MALAYSIA: Average Precipitation (in %of normal)

West Malaysia Sabah2001 2000 1999 2001 20001999Jan 204 152 128 8793 222Feb 99 147 131 227164 180March 97 144 146297 199 180April 118 102 7198 183 114May 71 58 105 6358 120June 112 77120 77July 85 8568 54Aug 92 11496 104Sept 106 11988 101Oct 76 109178 130Nov 90 87101 85Dec 102r 11182 139


ECONOMICS & INDUSTRY DEVELOPMENT DIVISION
Malaysian Palm Oil Board ( MPOB ) Lot 6, SS6, Jalan Perbandaran, 47301 Kelana Jaya, Selangor Darul Ehsan, MALAYSIA.
Tel : 603 - 7802 2800 || Fax : 603 - 7803 3533