CPO prices rise as stocks fall to 2.34m tonnes
KUALA LUMPUR: Palm oil inventories in Malaysia, the world’s second-largest producer of the edible oil, resumed their downward path last month as output fell and the pace of exports quickened, pushing palm prices to a 22-month high.
October inventories dipped 4.1 per cent to 2.34 million tonnes, their second lowest level this year after August’s 2.25 million tonnes, according to data from the Malaysian Palm Oil Board (MPOB) yesterday.
The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives closed at a two-year high of RM2,655 per tonne yesterday following the strongerthan-expected data.
Exports grew 16.4 per cent to 1.6 million tonnes last month, rebounding from an 18.8 per cent contraction in September.
“There’s been a great deal of exports that moved into China, which has been seeing lower soyabean oil production, so palm is the natural substitute,” said a trader. “They’re also buying ahead of Chinese New Year.”
Malaysia’s output dipped to 1.80 million tonnes last month, missing analyst forecasts and down about eight per cent from a year earlier.
The fall was tied to persistent dry weather and recent haze, which cut productivity, said Anilkumar Bagani, research head of Sunvin Group, a Mumbaibased vegetable oil broker.
“The data is positive for palm oil prices as the production and stocks are down and Nov 1-10 palm oil export shows promising numbers.”
The MPOB in September revised Malaysia’s 2019 annual output slightly lower to 20 million tonnes from its initial forecast of 20.3 million tonnes, and said it expected inventories to fall to two million tonnes by next month.
A Reuters survey had forecast palm oil stockpiles at the end of last month to rise 2.8 per cent to a seven-month high of 2.52 million tonnes.
Production was seen gaining two per cent to 1.88 million tonnes, and exports were seen up 13.1 per cent, at 1.59 million tonnes.