March 7, 2013 / 10:09 AM / in 5 years

PREVIEW-Malaysia Feb palm stocks head for 6-mth low on seasonal output fall

* WHAT: Malaysia’s February palm oil stocks, output and exports data

* WHEN: March 11, after 0430 GMT

By Chew Yee Kiat

KUALA LUMPUR, March 7 (Reuters) - An decline of nearly a fifth in output probably eased Malaysian palm oil stocks in February to a six-month low, a Reuters survey of five plantation companies showed on Thursday.

Inventory could have fallen 6.1 percent in February, the steepest decline since January 2011, to 2.42 million tonnes, which would mark the lowest level seen since last September.

Production in the world’s second-largest producer may have fallen to 1.31 million tonnes, a decline of nearly 18.1 percent from 1.6 million the previous month, crimped by seasonal factors.

Exports of the tropical oil probably eased 14.4 percent from a month ago to 1.39 million tonnes in February, due to a shorter month and a fall in demand for refined palm products.

Imports of crude palm oil from top producer Indonesia are likely to have grown to 75,000 tonnes from 54,781 tonnes the month before, according to the poll.

FACTORS TO WATCH:

A lower inventory level may provide some support for the benchmark third-month contract on the Bursa Malaysia Derivatives Exchange which has lost more than 6 percent in February.

Forecasts from six speakers at the Bursa Malaysia palm oil conference in the Malaysian capital showed prices could range from 1,800 to 3,200 ringgit this year, with the main focus on top analysts James Fry and Dorab Mistry.

Mistry was neutral on near-term prices, saying they should range between 2,300 and 2,500 ringgit till the end of April but might fall after that, while a more bullish Fry expected prices to climb to 2,625 ringgit by mid-year on biodiesel demand.

Market participants are watching closely developments in a standoff between the Malaysian army and an armed Filipino group in Sabah, which could possibly disrupt production in the state that contributes almost one-third of the country’s output.

Traders also expect Malaysia to export less crude palm oil in March after the world’s No.2 palm oil producer raised its export tax for the grade to 4.5 percent from zero.

Rival Indonesia, the world’s top palm oil producer, will increase its export tax for the crude grade to 10.5 percent in March from 9 percent the previous month.

Edible oil stocks in China and India were expected to hit a record in February, but the world’s top two edible oil importers may still buy more this year, as cheap cargoes and low import tariffs help meet growing food consumption and rein in food-driven inflation.

Breakdown of February estimates (in tonnes):

Range Median* Production 1,300,000 - 1,347,000 1,312,022 Exports 1,380,000 - 1,477,525 1,390,000 Imports 54,781 - 83,053 75,000 Closing stocks 2,377,782 - 2,480,000 2,420,000 * Median for closing stocks based on estimated exports of 1,390,000 tonnes and domestic consumption of 154,536 tonnes subtracted from 3,964,536 tonnes, the total of January’s estimated production, imports and official opening stocks. (Editing by Clarence Fernandez)

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