Malaysia June CPKO production improves on good weather

15 July 2011 04:54  [Source: ICIS news]

SINGAPORE (ICIS)--Malaysia’s crude palm kernel oil (CPKO) production improved to 194,324 tonnes in June, up 0.87% from May, because of good weather conditions in the key palm growing state of Sabah, industry sources said on Friday.

 “The weather in the past two months had been good, so we get better palm oil crops that produces higher yield,” said a Malaysia-based palm oil producer.

The strong harvest is expected to continue in the months but this will likely put pressure on CPKO prices, industry sources said.

“I expect CPKO production to increase in July as current weather patterns look conducive to palm cultivation this quarter,” said a Singapore-based palm oil trader.

On Friday, CPKO was trading at $1,322/tonne (€939/tonne) FOB (free on board) Malaysia, down by $418/tonne from a month ago, traders said.

Market players in the oleochemical sector welcome the decline in CPKO prices.

“This is good news to us,” said an India-based oleochemical buyer.

“Previous high prices of CPKO made fatty acids and fatty alcohols very expensive and I could only replenish cargoes on a need-to basis only,” said a Japanese buyer.

But the fall in CPKO prices may not be sustained for long, said a second palm oil trader.

“It is very hard to tell if CPKO prices will remain low throughout July despite [the] higher production forecast. It is so volatile nowadays, it may rebound anytime,” he said.

($1 = €0.71)

By: Serena Seng

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