CPO stockpile at one-year low

Malaysian palm oil endstocks fell unexpectedly last month, slipping to a one-year low, as exports outpaced forecasts and imports fell sharply from the previous month, industry regulator data showed yesterday.

The dip in stockpiles could further support benchmark palm oil prices, which have been trading at three-month highs, tracking gains in related edible oils and also bolstered by a weaker ringgit.

Malaysian palm oil futures closed at RM2,214 a tonne, here, yesterday.

Inventory levels fell for a fifth consecutive month to sit at a one-year low as of last month at 2.39 million tonnes, down 0.8 per cent from June, data from the Malaysian Palm Oil Board (MPOB) showed.

Malaysia’s palm oil exports rose 7.4 per cent last month from the previous month to 1.49 million tonnes, while imports tumbled from 101,250 tonnes in June to just 36,664 tonnes.

“Stockpiles are coming down due to lesser imports from Indonesia... The discount to Malaysian palm oil is narrowing, making it uneconomical to import to Malaysia,” said a Singapore-based trader.

The decline in stocks came even as production rose 15.1 per cent last month to 1.74 million tonnes, the highest monthly output this year.

It was also the biggest month-on-month rise since March last year.

“The pattern of increasing output in the first six months of the year was already pointing to higher levels. Good rains from last year is leading to better production,” said the trader.

“Full-year production may cross 21 million tonnes now. Stocks will continue to be above 2.2 million tonnes and pick up as we get into the final quarter of the year, which is also the peak production months for Indonesia.”

Malaysia produced 9.79 million tonnes in the first half, according to MPOB data, up from 8.9 million tonnes a year ago.

A Reuters poll at the start of the year pegged Malaysia’s production this year at 20 million tonnes.

Oil palm trees usually produce more in the third and fourth quarters of the year, with output peaking between August and October in recent years.

A Reuters survey had forecast palm oil stockpiles at the end of last month to rise 1.8 per cent to 2.47 million tonnes.

Production was seen gaining 11.4 per cent to 1.69 million tonnes, while exports were also seen up by 3.8 per cent to 1.44 million tonnes.