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Date
 14/05/2020
News Provider
 Nur Aisha Abd. Wahab
News Source
 Business Recorder
Headline
 Malaysian palm oil rises nearly 2pc

Business Recorder (14/05/2020) - Malaysian palm oil futures jumped nearly 2% on Wednesday on forecasts for lower production in May and tracking strength in rival soyaoil prices.


The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange closed up 38 ringgit, or 1.9%, at 2,032 ringgit ($470.15) per tonne, after falling 1.3% in the previous session.


While data from the Malaysian Palm Oil Board showed April output and inventories rose 18%, analysts expect slower production growth this month.


“Production figures have increased 41% from the lows in January, inferring that a breather could be in store in the upcoming months … before the usual peak production period in the (second half of the calendar year)," Adrian Kok, an equity analyst at Kenanga Investment Bank, said in a research note.


Kenanga Research expects monthly growth of just 2.7% in May production, while CGS-CIMB forecast output will fall 3% on account of festive breaks during May.


Analysts, however, also expect May inventories to rise further to breach 2.2 million tonnes due to weak demand.


“With supply concerns easing, festive demand will be the key focus in May," Ivy Ng, regional head of plantations research at CIMB Investment Bank, said in a research note.


Malaysian palm oil industry leaders in a webinar warned of lower prices this year as the pandemic cuts global demand and boosts inventories, with the biggest producer warning of painful cost cuts.


The Malaysian Palm Oil Association Chief Executive Nageeb Wahab said during the webinar that Malaysia is unlikely to regain market share in India in the near term as the top buyer shifts its edible oil preference to soyaoil.


Indonesia, the world's top producer, is considering alternate plans to increase subsidies for the country's ambitious biodiesel programme after crude oil prices tumbled, a finance ministry official said on Wednesday.


Dalian's most-active soyaoil contract gained 1%, while its palm oil contract rose 0.78%. Soyaoil prices on the Chicago Board of Trade were trading up 0.38%.


Read more at https://www.brecorder.com/2020/05/14/596690/malaysian-palm-oil-rises-nearly-2pc/



ECONOMICS & INDUSTRY DEVELOPMENT DIVISION
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