Malaysia’s end-Septem­ber palm stocks rise 5.7%

The Sun (Malaysia) - - SUNBIZ -

KUALA LUMPUR: Malaysia’s palm oil in­ven­to­ries at the end of Septem­ber edged up from a near six-year low reached in the pre­vi­ous month, as ex­ports to top palm con­sumer coun­tries weak­ened and pro­duc­tion rose at a lower than av­er­age rate.

Ris­ing stock­piles could weigh on bench­mark palm oil prices, which have fallen about 6% since climb­ing to a five­month high on Sept 26 on fore­casts of in­creas­ing out­put.

Palm is up 0.3% at RM2,569 per tonne at the mid­day break yes­ter­day.

End-stocks in Malaysia, the world’s sec­ond-largest palm oil pro­ducer af­ter In­done­sia, gained 5.7% to 1.55 mil­lion tonnes, up from 1.46 mil­lion tonnes in Au­gust, data from in­dus­try reg­u­la­tor the Malaysian Palm Oil Board (MPOB) showed.

Septem­ber pro­duc­tion also rose, climb­ing 0.8% from the pre­vi­ous month to 1.72 mil­lion tonnes, its small­est monthly gain since June 2011. This was the low­est out­put fig­ure for Septem­ber since 2010.

“Pro­duc­tion is not go­ing to jump sig­nif­i­cantly in the next two months. Malaysia’s pro­duc­tion re­cov­ery is pretty slow, un­like In­done­sia’s,” said Ivy Ng, re­gional head of plan­ta­tions re­search at CIMB In­vest­ment Bank, adding that Oc­to­ber out­put will see a sin­gle digit per­cent re­cov­ery at best due to the lin­ger­ing ef­fects of the El Nino weather pat­tern.

“It’s close to peak­ing at these lev­els, it could go slightly higher but that’s about it. Planters are hop­ing for a pro­duc­tion re­cov­ery but we don’t see it so far and don’t ex­pect to see a lot more up­side from where it is now. Out­put reach­ing the 1.8 mil­lion tonne mark is pos­si­ble, but not 2 mil­lion tonnes.”

A crop dam­ag­ing El Nino brings scorch­ing heat across South­east Asia, and has low­ered palm out­put in top grow­ers In­done­sia and Malaysia this year.

The MPOB data also showed Septem­ber ex­ports dropped to 1.45 mil­lion tonnes, down 20.4% from a record high of 1.81 mil­lion tonnes in Au­gust, and its big­gest monthly slide since Jan­uary 2015.

Traders said ex­ports fell due to a high Au­gust base and on weaker ship­ments to top con­sumers China and In­dia.

“Ex­ports saw a mas­sive de­cline, es­pe­cially from In­dia.

They’ve done their re­stock­ing and passed their needs for sea­sonal buy­ing,” said David Ng, a de­riv­a­tives spe­cial­ist at Phillip Fu­tures in Kuala Lumpur, re­fer­ring to In­dia’s sea­sonal palm oil up­take for the Hindu fes­ti­val of Di­wali on Oct 30.

“Now we’re look­ing at China, but their stock in­ven­tory is build­ing up so de­mand is slow­ing down also. Fun­da­men­tals of palm oil looks at­trac­tive, but sen­ti­men­t­wise it is on the weak side.”

A Reuters poll had fore­cast in­ven­to­ries at 1.51 mil­lion tonnes, a 3.1% gain from Au­gust. Septem­ber out­put was seen at 1.77 mil­lion tonnes, while ex­ports were es­ti­mated to drop 15.5% to 1.53 mil­lion tonnes. – Reuters

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