Malaysia?s Feb palm oil stocks rise unexpectedly, prices to fall

KUALA LUMPUR, March 12 ? Malaysia?s palm oil stocks rose unexpectedly in February as a decline in exports outpaced a fall in output, industry regulator Malaysian Palm Oil Board said on Monday, potentially weighing on prices.???

Stocks in the world?s No.2 producer of the edible oil rose 2 per cent to 2.06 million tonnes from January, going against market expectations for a 3 per cent drop and snapping four straight months of declines. ???

Inventories at above 2 million tonnes suggest Malaysia has been losing market share to Indonesia, which has been offering discounts on cargoes after Jakarta slashed export taxes for refined product cargoes.???

Although ample stocks in Malaysia can shore up global edible oil supply in the wake of erratic weather affecting South American soy crops, palm oil futures may come under pressure after slipping 0.2 per cent ahead of the data release.???

?A few people are going to get caught out,? said a trader with a foreign commodities brokerage in Kuala Lumpur as the market had been rallying on expectations of strong Asian demand chasing limited edible oil output growth.???

Malaysia?s February production dropped 7.9 per cent to 1.19 million tonnes as yields weakened after months of strong output last year and heavy rains delayed some harvesting rounds.???

Analysts have been betting on weaker palm oil yields in Malaysia as the production cycle shifts to a lower gear although supply from Indonesia, which took over from Malaysia as the top producer in 2007, will rise on more acreage coming into maturity.???

Malaysia?s February exports dropped 12.6 per cent to 1.21 million tonnes with Indonesia capturing some of the business at a time when China was restocking after the Lunar New Year holidays in January and India was importing more to make up for the shortfall in domestic output.???

Exports in March, however, look more promising with cargo surveyor Intertek Testing Services reporting a nearly 30 per cent increase in the first ten days due in part to the resumption of tax free crude palm oil quotas. ???

?The quota is giving some support to exports. But March will see some normalisation of demand, not too much, due to Indonesia,? said another trader with a palm oil firm in Malaysia that gets some of quota to feed its overseas refineries. ? Reuters?

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Source: http://business.rss.themalaysianinsider.com/c/33362/f/567636/s/1d58c311/l/0L0Sthemalaysianinsider0N0Cbusiness0Carticle0Cmalaysias0Efeb0Epalm0Eoil0Estocks0Erise0Eunexpectedly0Eprices0Eto0Efall0C/story01.htm

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