Palm oil sees highest stockpile since November 2019

KUCHING: Palm oil stockpile remained on an uptrend in August as analysts believe stockpile will remain elevated in the coming month on the back of seasonally higher output trend and Indonesian government’s move to accelerate palm oil exports.

Palm oil stockpile remained on an uptrend, rising by 18.2 per cent month on month (m-o-m) to 2.09 million tonnes in Augusut 2022, boosted by higher output and lower exports, commented analysts at Hong Leong Investment Bank Bhd (HLIB Research).

“The stockpile came in marginally higher than Bloomberg median estimate’s 2.05 million tonnes, due mainly to lower-than-expected exports,” it said yesterday.

“Palm oil output increased for the third consecutive month, by 9.7 per cent m-o-m to 1.73 million tonnes in August 2022, mainly on the back of seasonal factor with output contribution from Peninsular Malaysia and East Malaysia rising by 4.4 and 16.9 per cent respectively.

“Year to date, output fell marginally by 0.2 per cent to 11.57 million tonnes in August, dragged mainly by a two per cent decline in East Malaysia’s output.”

Looking at palm oil exports, it declined marginally, by 1.9 per cent m-o-m to 1.3 million tonnes in August 2022, as the increase in exports of crude palm oil (CPO) was more than offset by a decline in processed palm oil by 2.8 per cent.

Geographically, higher exports to China (by 128.9 per cent) and European Union (by 80.4 per cent) were moderated by lower exports to India (minus 9.2 per cent), Iran (minus 30.6 per cent), Philippines (minus 41.5 per cent), Saudi Arabia (minus 38 per cent) and Turkey (minus 47.2 per cent).

Preliminary data from Amspec and Intertek indicated that palm oil exports increased by 9.3 to 16.2 per cent m-o-m (to 340,000 to 424,000 tonnes) during the first 10 days of September.

HLIB Research believes palm oil stockpiles will likely remain elevated in September, on the back of seasonally higher output trend and Indonesian government’s move to accelerate palm oil exports.

“This will in turn, drag palm oil exports from Malaysia, which will more than offset potentially higher demand from India (arising from restocking activities ahead of festive season).