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Malaysia's palm oil stocks hit 8-mth high in September

Malaysia's palm oil stocks hit 8-mth high in September

October 10, 2018

 

Malaysia's palm oil inventories edged up in September to their highest in eight months, surpassing market expectations as production levels came in higher than exports, despite a surge in overseas demand, government data showed on Wednesday. Stockpiles in the world's No.2 producer and exporter of palm oil, used to make products ranging from cooking oil to chocolate, rose 1.5% from the previous month to 2.54 million tonnes, according to the data from the Malaysian Palm Oil Board (MPOB). The climb came despite exports jumping 47.2% from August to their highest in over two years at 1.62 million tonnes. That also marked their biggest monthly gain since

 

October 2006. "Due to the zero export tax rate, India and China lifted demand," said David Ng, a derivatives specialist at Phillip Futures in Kuala Lumpur.Ng added India's demand was also stoked by stronger buying ahead of the Hindu festival of Diwali celebrated in early November, while a weaker ringgit made palm oil more affordable for Chinese buyers.

 

"Moving forward, we'll have to see how key countries sustain exports. The export pace may continue in October but at a lower rate than September, which could pressure the market."Malaysia cut its crude palm oil export tax for September to zero from 4.5% in August. It has kept the rate at zero for October.The MPOB also reported that September production rose 14.4% from August to its strongest in 10 months at 1.85 million tonnes. That was also the highest September level since 2015.

 

Traders and analysts said production was in line with market expectations, and was seen peaking in the final quarter of the year."There is strong output still this month on bumper crops and supportive weather," said William Simadiputra, an analyst at DBS Vickers Securities. "We forecast output will peak in October, before declining in November and December."A Reuters survey had forecast palm oil's end-September stockpiles to edge down 0.7% to 2.47 million tonnes, while production was seen up 14.7% at 1.86 million tonnes. Exports were also forecast to jump 50% to 1.65 million tonnes.

 

The following is a breakdown of the Malaysian Palm Oil Board figures and Reuters estimates for September:

 

(volumes in tonnes)

          Sept 2018   Sept 2018 poll    Sept 2017    Aug 2018
 Output   1,853,601      1,861,500      1,779,918   1,620,605*
 Stocks   2,541,152      2,471,000      2,015,922   2,504,874*
 Exports  1,618,702      1,649,500      1,519,284   1,099,776*
 Imports    61,599        75,019         41,173       80,191

*denotes revised figures          

(US$1 = 4.1515 ringgit)

 

Source: http://www.theedgemarkets.com/article/malay

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