September palm stocks set to snap six months of falls

: Malaysian palm oil stockpiles in September likely rose for the first time in seven months, as production grew and export demand eased for the edible oil, a Reuters survey showed.

Inventories in the world’s second-largest palm oil producer are forecast to rise 11.9% from August to 2.52 million tonnes in September, their highest in five months, according to a median estimate of eight planters, traders and analysts polled by Reuters.

Higher stocks could put further pressure on benchmark palm oil prices, which hit a more than one-month low at the end of September.

Prices have been trading in a tight range since then, and were last 0.6% higher at RM2,161 at the midday break on Monday.

Stockpiles were largely expected to rise as exports slumped for the first time in three months.

Exports likely shrank by 19.4% to 1.4 million tonnes from a three-year high in the previous month, as demand from markets such as India eased.

“We saw lower exports to India as they purchased more refined oil from Indonesia instead due to the recent change in duty structure,“ said a manager at a Malaysian plantation firm, who declined to be named as he was not authorised to speak to the media.

“Though September exports are lower month-on-month, they are still considered good as August exports were the highest in three years.”

India, the world’s biggest edible oils importer, in September raised the tax on refined palm oil from to 50% from 45% for six months to curb imports and boost local refining.

Industry players had forecast that demand for Malaysian refined palm oil would drop sharply following the tax hike, limiting further exports from the Southeast Asian country and leading to higher inventories.

Malaysian palm likely rose in line with seasonal trend, contributing to the gain in inventories and marking a third straight month of gains in production.

The poll pegged September production at 1.91 million tonnes, up 4.6% from the previous month and the highest in nearly a year. “Fresh fruit bunch yields remain strong and growth is mainly coming from East Malaysia estates,“ Ivy Ng, regional head of plantations research at CIMB Investment Bank, said in a note.

Malaysia’s eastern states of Sabah and are the country’s top two producing regions of palm oil. – Reuters

Source: The Sun Daily

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