June 10 - MPOB End-May Inventory & Export Data

*Malaysia May CPO Output 1.38 Mln Tons; Up 1.3% on Month -MPOB

*Malaysia’s May Palm Oil Exports 1.41 Mln Tons; Down 3% on Month -MPOB

*Malaysia’s End-May Palm Oil Stocks 1.82 Mln Tons; Down 5.1% on Month -MPOB

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End-April stocks was at 1.93mil tonnes.

A bullish crop data indeed, as speculated by market the past week, shown in the steep rally from 2,364 low to 2,470 high over 3 bullish days.

Note that however, most players were betting on a LOWER Output/Production (though we are supposed to be at seasonal high production period), to help ease the stocks level.

However, from the figures breakdown, we should notice that the stocks level decreased due to Domestic Consumption, as both lower exports & higher production wasn't helping to ease inventory.

The argument now is:

How long can the domestic consumption continue to support CPO price? 

There are reports circulating in the market on higher consumption for biodiesel use domestically, to justify the recent trend of increasing domestic usage of CPO.

Nevertheless, we all know that the local consumption only form a tiny portion of our CPO industry output, on an average.

Eventually, we will have to see more export demand to come in to justify the recent rise in CPO price.

To the bright side of things, June 1-10 export estimates by Intertek was encouraging as well:

*Malaysia June 1-10 Palm Oil Exports Up 10% on Month -Intertek

Let's continue to keep an eye on the export demand in June to gauge whether the recent strong rally on CPO price has legs.