Malaysia’s palm oil stocks improved 1% mom to 1.66m tonnes at end-July. This is 3% below our forecast but 3% above consensus. We are neutral on this news and project that CPO prices will remain range-bound as the fear of rising supplies offsets the low stocks. The big surprise came from the higher-than-expected mom improvement in production signalling the beginning of the high production season. We project palm oil stocks to rise in August as the improvement in production more than offsets the exports and domestic consumption. We keep our Neutral sector call. First Resources, Wilmar and IOI Corp remain our top picks.
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