Palm oil shipments from Indonesia probably slumped by the most in two years in March, slowing a decline in inventories at the world’s largest producer, as demand eased from China, the second-biggest buyer.
Sales plunged 19 percent to 1.65 million metric tons from 2.04 million tons a month earlier, according to the median of estimates from four plantation company executives and one analyst compiled by Bloomberg. That would be the steepest drop since March 2011, data from the Indonesian Palm Oil Association, or Gapki, show. Output fell 5 percent to 1.9 million tons, while inventories dropped 1.7 percent to 2.95 million tons, according to the median of estimates from three executives and one analyst.
Falling shipments from Indonesia may curb the decline in stockpiles, extending a 33 percent plunge in prices in Kuala Lumpur in the past year. Reserves may drop to 2.3 million tons this year from 2.5 million tons at the end of 2012, according to Derom Bangun, chairman of the Indonesian Palm Oil Board. Exports in February were the highest in at least five years, as China boosted purchases, Gapki said April 4. Stockpiles probably fell 14 percent that month, a survey published Feb. 14 showed.
“High exports in the previous month was to fill demand for the Chinese New Year,” said Hariyanto Wijaya, a Jakarta-based analyst at PT Mandiri Sekuritas, referring to the festival that fell in early February this year. “In March, purchases were not as strong because most of the demand has been covered.”
Imports by China in the six months through September may fall to 2.39 million tons, from 3.56 million tons in the six months to March 31 and 2.68 million tons a year ago, Liu Xianwu, general manager of China Cereals & Oils Business Net, the country’s biggest independent oilseed researcher, said April 2. Reserves at ports are near a record 1.46 million tons and will remain above 1 million tons until at least July, Liu said.
Bangun said in a March 4 interview that he’s bullish on palm, forecasting inventories in Indonesia to drop as an increase in demand outstrips record output of 30 million tons.
“The key, going forward, is how Indonesia can maintain its competitiveness with rising output,” said Wijaya.
The country may boost output by 5.7 percent to 28 million tons this year, Gapki said Jan. 8. The growers’ group, which doesn’t issue data on production and stockpiles, may release March exports figures at the end of this month.
Reserves fell to 3 million tons in February from 3.5 million tons a month earlier, according to the Feb. 14 Bloomberg survey. The January total was the highest figure since the surveys began last year.
Stockpiles in Malaysia probably fell the most in more than two years in March as exports from the world’s second-largest producer increased for the first time in five months, according to a Bloomberg survey published yesterday. The Malaysian Palm Oil Board is scheduled to release the official data on April 10.
The forecasts for rising exports and declining reserves sparked a rally on the Malaysia Derivatives Exchange. Palm oil for June delivery fell 0.2 percent to close at 2,395 ringgit ($789) a ton today.