Malaysia expects lower CPO yield in May and June

Norway

KUALA LUMPUR: Malaysia’s palm oil stockpiles hit a 13-month low in April, driven by shrinking output on the back of lagged effect of the drought in 2015 and Maybank Investment Bank Research expects the yields to continue to be impacted.

The research house said on Wednesday it expects output for May and June to suffer low yields as well, helping to boost CPO price to fresh high of RM2,800 to RM2,900 per tonne.

The research house the lagged impact on output would be greatest in 2Q16 although El Nino is near its tail-end.

Malaysia recorded double-digit year-on-year negative output growth in March and April 2016, although the areas hardest hit by the drought last year were Central Kalimantan, South Kalimantan, Riau and South Sumatra. 

“We anticipate the double digit decline in output to persist into May-Jun 2016, boosting CPO price,” Maybank Research.

It maintained its Neutral outlook on the plantation sector.

Maybank Research said concern over upcoming weak 1Q16 results season has led to some short term profit taking last month.