Friday 29 Mar 2024
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KUALA LUMPUR (Feb 10): Malaysian crude palm oil production dropped 14.96% to 1.16 million tonnes in January 2015 from 1.365 million tonnes in December 2014, lower than forecasted, as flooding in East Malaysia disrupted harvesting coupled with seasonally low output.

According to data released by the Malaysian Palm Oil Board (MPOB) today, Malaysian palm oil stocks also dropped 12.18% to 1.77 million tonnes in January, its lowest level in six months, following flooding in the East Coast of Peninsular Malaysia, Sabah and Sarawak,coupled with seasonally low output.

Palm oil stocks stood at 2.02 million tonnes in December last year.

Exports dipped 22.07% to 1.18 million tonnes in January 2015 compared to 1.52 million tonnes in December 2014.

MPOB’s data on the production of crude palm oil was lower than projected by a Reuters survey of six planters.

The survey posited that January's crude palm oil production is expected to fall 13% from December 2014 to 1.19 million tonnes in January 2015, the lowest since Feb. 2011, after flooding in Sabah and Sarawak disrupted harvesting and reduced yields already stressed by dry weather early last year.

The survey, however, pegged the drop in palm oil stocks accurately by 12.2% to 1.77 million tonnes, its lowest level since July last year.

Reuters reported that the drop in inventories may fuel a rally in palm oil prices, which had surged over 5%, recoding its biggest gain since October 2010.

This was fuelled by hopes that Indonesia's proposal to increase biodiesel subsidies will make blending profitable, which is expected to carve out 3 million tonnes of palm oil stocks from the market.

The proposal, tabled by President Joko Widodo's government, has already received support from the parliamentary committee which backed a near-threefold increase in the subsidy to 4,000 rupiah per litre from 1,500 rupiah.

Exports were also lower than forecasted by the Reuters survey, which said shipments of Malaysian palm oil products in January would decrease by 15.1% due to weaker demand from China, Europe and India.

The April contract rose RM20 per tonne on Bursa Malaysia today to RM2,331.

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