KUALA LUMPUR: Palm oil stockpile will likely remain on the uptrend in September, on the back of continued seasonal uptick in cropping pattern, said Hong Leong Investment Bank Bhd (HLIB).
HLIB added that palm oil exports might weaken from July, arising from palm's weakened price competitiveness against seed oils and gas oil.
This follows continued uptrend in palm oil stockpile by 7.3 per cent month-over-month (MoM) to 1.88 million tonnes in August, on the back of seasonally higher production and lower exports.
"The stockpile came in marginally higher than Bloomberg median estimate of 1.86 million tonnes, due to slightly higher-than-expected production," HLIB said in a research note.
Palm oil exports declined 9.7 per cent MoM to 1.53 million tonnes in August, due mainly to palm's weakened price competitiveness against other competing oils.
HLIB said palm's average discount to soy oil narrowed to US$24 per tonne in August from US$161 per tonne in July.
"According to data published by cargo surveyor Intertek Services, palm oil exports in August was pulled by lower shipment to China, Europe Union (EU), India and Middle East.
"To date, exports in the first eight month of this year rose 11.1 per cent to 10.7 million tonnes, boosted mainly by higher shipment to Africa, Asia Oceania, EU and India," the firm said.
HLIB said the exports during first five days of September has increased 9.2 per cent MOM to 214,000 tonnes, attributed to higher shipment to Asia Oceania, China, EU, India, and Middle East.
"We maintain 2024-2025 crude palm oil price assumptions of RM4,000 per tonne and RM3,800 per tonne, as well as our 'neutral' stance on the sector," it said.
HLIB said its top picks are IOI Corporation Bhd (buy; target price: RM4.22) and Hap Seng Plantations Holdings Bhd (buy; target price: RM2.21).