KUALA LUMPUR: Malaysia's palm oil exports for this year is set to tip last year's RM65.41 billion, as oil palm planters are hopeful that the recent rally in prices would sustain its momentum in the next few months.
"It's heartening to see palm oil prices rising from RM2,200 per tonne to RM2,600 since the middle of October," said Malaysian Palm Oil Association (MPOA) chief executive Datuk Nageeb Wahab.
"Our members are hopeful of the price rally maintaining its momentum as global demand for palm oil is picking up," he told the New Straits Times in a telephone interview today.
According to Malaysian Palm Oil Board's (MPOB) data, 2018's palm oil exports amounted to RM65.41 billion. In the first 10 months of this year, palm oil shipment to more than 150 countries totalled RM53.23 billion.
When asked to forecast this year's palm oil exports, Nageeb replied, "in view of the jump in prices, we're now more optimistic of palm oil exports surpassing last year's RM65.4 billion."
Analysts also acknowledged the positive development in the export market.
Maybank Kim Eng Research senior analyst Ong Chee Ting, in his notes to investors, stated that MPOB’s October stockpile unexpectedly declined to 2.35 million tonnes on lower-than-expected production and better-than-expected exports.
"This was reflected in the palm oil futures rally where spot and third month futures jumped 17 per cent and 18 per cent, respectively, over the past month," he added.
Today, the third month benchmark palm oil futures on Bursa Malaysia Derivatives Exchange opened at RM2,571 per tonne.
Public Investment Bank analyst Chong Hoe Leong believes palm oil prices are likely to surpass RM2,800 per tonne in coming months due to the tightening palm oil supplies in the global markets.
"Since our upgrade on the plantation sector outlook to 'overweight' in early-October, palm oil futures have rallied by more than 20 per cent," he said in his notes to investors earlier this week.
Palm oil futures had traded in the range of between RM2,137 and RM2,496 per tonne over the last one month.
In the agriculture industry, the stock-to-use ratio tells us how much inventory of a particular crop is available for consumption. A lower supply of crops to its demand results in a lower stock-to-use ratio. This pushes up the price of the commodity.
Chong highlighted Malaysia’s palm oil stock-to-usage ratio, for the past couple of months, had fallen from 12.0 per cent to 9.9 per cent. Therefore, it was not surprising to see palm oil futures had risen from RM2,137 to RM2,496 per tonne.
"This should be a boon to all plantation companies after suffering from the poor palm oil price performance over the last two years," he added.