12.02.2018 (Platts) - January palm oil production in Malaysia missed market expectations, coming in at 1.586 million mt, down 13.5% month on month, with analysts predicting output of 1.8 million-1.83 million mt, data from the Malaysian Palm Oil Board showed Monday.
Palm oil exports in January were higher than expectations of around 1.4 million mt, hitting 1.51 million mt, up 6% from December.
Export demand was driven by major importing countries like India, Bangladesh, Turkey, Japan, Egypt, Ghana and Pakistan, the MPOB data showed.
Dips in crude palm oil front-month futures on Bursa Malaysia in early December drove demand which had now materialized
Some analysts had been expecting a surprise fall in Chinese palm oil imports during January, down to 156,787 mt from December's 175,397 mt, to weigh on Malaysian exports.
The drop in Chinese demand occurred just before the country's New Year festival which is typically a big driver of palm oil demand.
Lower January production in Malaysia combined with higher exports led to a contraction in January CPO inventories to 2.55 million mt from 2.73 million mt in December.
January palm oil methyl ester exports beat forecasts, with exports at 33,087 mt, up from 14,220 mt in December.
Cargo surveyor data for January exports had shown a total export volume of only 15,800 mt from Pasir Gudang port in Malaysia. Malaysian exports of PME are expected to fall in the coming months since the European Union abolished anti-dumping duties on Indonesian PME.
Market watchers expect lower-priced Indonesian PME to displace Malaysian product.
However, no big sales of Indonesian PME have yet been recorded, mostly because the EU has not set a firm timetable for the suspension of anti-dumping duties and producers and traders are not willing to take a risk on delivery.
Malaysian PME exports are also experiencing a time lag, since most of these sales were done late last year, and some producers have contracts to deliver PME to European buyers until March or April.