Malaysia's palm oil stockpile sinks to near 2-year low (ext: BT)

THE price of palm oil is expected to hold at around RM2,700 per tonne as Malaysia's stockpile fell to its lowest in almost two years.

The stockpile has almost halved to 1.29 million tonnes at the end of April this year, from a record of 2.27 million tonnes in November 2008.

In the first four months of this year, the oil palm trees produced only 5.08 million tonnes of crude palm oil. This is 4 per cent less than a year ago.

While palm oil supply continues to fall, exports seemed to have started to weaken. The Malaysian Palm Oil Board's statistics show that April's exports only amounted to RM3.6 billion, the lowest in the first four months of this year.

A trader attached to a plantation company listed on Singapore stock exchange said weak April exports can be attributed to the narowing price spread between soya and palm oil.

"Now that there is not much price difference between soya and palm, buyers are not specifically asking for palm oil like in January," he told Business Times in a telephone interview yesterday.