Palm oil stocks climb in Au­gust

> In­ven­to­ries rose 8.79% but re­mained be­low the two-mil­lion-tonne mark due to stronger-than-ex­pected ex­ports

The Sun (Malaysia) - - SUNBIZ -

KUALA LUMPUR: Malaysian palm oil stock­piles climbed again in Au­gust, but did not to breach the two-mil­lion tonne mark due to stronger-than-ex­pected ex­ports of the com­mod­ity, used to churn out prod­ucts rang­ing from choco­late to sham­poo.

In­ven­to­ries of the trop­i­cal oil rose 8.79% from July to 1.94 mil­lion tonnes, data from in­dus­try reg­u­la­tor the Malaysian Palm Oil Board (MPOB) showed yes­ter­day, the high­est level since Fe­bru­ary 2016.

Grow­ing stocks in the world’s No.2 palm pro­ducer, could dampen bench­mark prices for the oil, which gained 2% last week. They stood at around RM2,780 a tonne yes­ter­day.

“Al­though we are slightly pos­i­tive that stock lev­els are lower than ex­pected, they are still climb­ing,” said Ivy Ng, an in­dus­try an­a­lyst at CIMB Re­search.

The data showed that Au­gust ex­ports had risen 6.43% from July to 1.49 mil­lion tonnes, beat­ing an­a­lyst ex­pec­ta­tions of 1.42 mil­lion tonnes.

“Ex­ports have done bet­ter than es­ti­mated, which is why stocks were be­low the ex­pected twomil­lion-tonne level,” Ng said.

De­mand for palm oil is ex­pected to be well sup­ported in Septem­ber ahead of ma­jor fes­ti­vals in top con­sumers In­dia and China the fol­low­ing month.

“We are op­ti­mistic on de­mand due to the Di­wali and MidAu­tumn fes­ti­vals in Oc­to­ber. We should see im­prove­ments in Septem­ber ex­ports ahead of (those cel­e­bra­tions),” Ng added.

The gains in stock­piles came de­spite pro­duc­tion de­clin­ing 0.9% from July to 1.81 mil­lion tonnes.

Palm oil out­put in Malaysia is seen re­cov­er­ing in the sec­ond half of this year as the crop dam­ag­ing ef­fects of an El Nino weather pat­tern fade.

Out­put is set to re­cover this quar­ter, but an­a­lysts and planters say trees are still see­ing some lin­ger­ing im­pact from the 2015 El Nino.

A Thom­son Reuters sur­vey had pegged in­ven­tory lev­els ris­ing 6.5% to 1.9 mil­lion tonnes in Au­gust. Pro­duc­tion was seen down 1.5% per­cent at 1.8 mil­lion tonnes. – Reuters

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