Palm Oil 02 (Jun 14 - Dec 26)

[winston]

2H22 Outlook: In rebuilding supplies mode

Weather still key in determining near term supply

Oil World and USDA, in their preliminary forecasts, are both projecting the stock-to-usage ratios of edible oils to be relatively ample the next 12 months.

Still, July and Aug are crucial weather months for oilseeds developments in the Northern Hemisphere as another round of crop failure may tighten supplies yet again and keep edible oils prices elevated for another 6-12 months.

Barring any weather anomaly, we expect CPO price to be weaker HoH in 2H22.

We maintain our NEUTRAL call. We upgrade FR to Hold (from Sell) following recent sell-down while keeping IOI and KLK as our preferred BUYs.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/268215.pdf

[winston]

Palm oil sets nine-month low on strong exports, bloated reserves

by Sing Yee Ong

Slumped more than 40% from its record close in April, and could slide further as Indonesian supplies are set to flood the market.

Indonesia is ramping up palm oil exports to cut its huge inventories by allowing producers to ship volumes at a rate of seven times their domestic sales obligation, up from five times.

In Malaysia, stockpiles probably jumped about 13% in June from a month earlier to 1.72 million tons, the biggest monthly increase in 10 months.

Indonesia's plan to increase its mix of palm oil in biofuel from the current 30% to 35% or 40%, as well as persistent labour woes in Malaysia, could continue to support the palm oil market.

Source: Bloomberg


https://www.theedgemarkets.com/article/ ... d-reserves

[winston]

Volatile CPO price on high stock levels

By ZUNAIRA SAIEED

Remain weak until Indonesia’s palm oil stocks fall to between four million and five million tonnes from as high as eight million to 8.5 million tonnes at end-June,”

Indonesia’s palm oil stocks stood at 6.1 million tonnes and 3.6 million tonnes at end-April 2022 and December 2021.

Lower palm cash prices and a weaker ringgit is likely to trigger renewed buying interest, as the devalued currency makes the ringgit-denominated tropical oil inexpensive to international buyers.

Source: The Star

https://www.thestar.com.my/business/bus ... ock-levels

[winston]

Crude palm oil price likely to remain elevated

05 Jul 2022

CPO prices will be supported by higher price of edibles oil on the back of supply concerns.

This comes amid the Russia–Ukraine war, a subdued production outlook for soybean in 2022-2023 due to the return of La-Nina for the third-year in a row in South America and compounded by a lower planted area in the United States and improved demand outlook in line with the recovery in economic activities.

Source: The Star

https://www.thestar.com.my/business/bus ... n-elevated

[winston]

Indonesia considering cutting palm oil export levy to spur shipments

by Bernadette Christina & Fransiska Nangoy

Indonesia had cut the export levy to a maximum US$200 per tonne for July from US$375 previously but is due to increase the level to US$240 in August.

Asian palm oil prices slumped in recent weeks amid Indonesia's shipments resumption, higher output and fear of recessions.

Malaysian benchmark palm oil prices has dropped by 18% so far this month.

Source: Reuters

https://www.theedgemarkets.com/article/ ... -shipments

[winston]

CPO prices seen moderating further in 2H

CPO prices have fallen by more than 30% in the last three weeks.

“Other commodities like soybean prices also fell 10%, wheat prices were down 14% and crude oil prices retreated 15% in the last few weeks”.

Price-sensitive nations like China, India, Pakistan and Bangladesh.

Source: The Star

https://www.thestar.com.my/business/bus ... ther-in-2h

[winston]

Indonesia plans to implement B35 biodiesel soon

The world’s biggest palm oil producer currently has a mandatory 30% blend of palm oil-based fuel in its biodiesel and the government has been looking at raising it to 35% or 40%, to support the price of local palm oil fruits.

CNBC Indonesia cited Dadan as saying yesterday that B35 should be brought in by the end of the month.

“We will run a road test for B40. For now, B35 would be implemented,” Dadan was quoted as saying.

Source: Reuters

https://www.thestar.com.my/business/bus ... iesel-soon

[winston]

Regional Plantation Companies: Temporary price retreat

CPO price tumbled after Indonesia resumed CPO exports

Indonesia biodiesel programme and lower levies to support domestic price and global CPO demand

Indo-Singapore CPO stocks trading at single digit PE

Maintain BUY for First Resources (FR), Bumitama (BAL), Lonsum (LSIP), and Wilmar (WIL)

Source: DBS

[winston]

Plantation – Malaysia
High CPO Prices Killing Off Demand

Malaysia’s end-Jun 22 palm oil inventory was below market expectations due to lower than-expected production and exports.

We believe the lower exports in Jun 22 were mainly due to high prices which muted demand.

We expect exports to be higher in Jul 22 with CPO prices trending down, but we foresee CPO prices trading at around the RM3,500-4,500/mt support level in view of returning demand from destination markets.

Maintain MARKET WEIGHT.

Source: UOBKH

https://research.uobkayhian.com/content ... e7f8f09369

[winston]

A normalization of inventory still 2 months away

Export-friendly measure and increase in biodiesel mandate (to B35) announced recently by the Indonesia (ID) government will help resolve its bloated inventories (estimated to be >8.5mt) but may take at least 2 months for inventories to normalize as ID is now entering its seasonal peak production cycle in 2H.

The high export taxes for the month of July is a currently a deterrent on exports and ought to be cut immediately to help boost exports. Stay NEUTRAL.

Our preferred BUYs: IOI and KLK.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/269389.pdf