MARKET DEVELOPMENT
UPDATE 1-Malaysia End-Aug Palm Stocks Edge Up, But Below Expected Levels
UPDATE 1-Malaysia End-Aug Palm Stocks Edge Up, But Below Expected Levels
11/09/2013 (Reuters) - Malaysia's end-August palm oil stocks showed a smaller-than-expected rise as production of the tropical oil grew at a slower-than-forecast rate, industry data showed.
The data could provide some near-term support to palm prices which have lost 3.2 percent so far this year. But any gains may not be sustainable as demand may not be enough to offset seasonally higher output in the coming months, traders said.
Oil palm trees seasonally produce more fresh fruit bunches in the second half of the year, paving the way for a larger supply of the vegetable oil to flow into the market and potentially crimp prices.
Production of the tropical oil was up by 3.6 percent to 1.74 million tonnes in August, data from the Malaysian Palm Oil Board (MPOB) showed on Tuesday, against a Reuters poll of plantation firms that had predicted a 5 percent rise.
Inventories rose 0.1 percent from end-July to 1.67 million tonnes, marking its highest level since May. The rise was below market estimates that stocks had grown by 4 percent to 1.73 million tonnes.
Exports rose 7.4 percent to 1.52 million tonnes, slightly below forecasts for 1.53 million tonnes, with Malaysia enjoying healthy demand from China as the world's second-largest palm oil buyer stocked up ahead of its Mid-Autumn festival in September.
The festive demand could trickle into early September. Cargo surveyor data released earlier on Tuesday showed shipments of Malaysian palm oil in the first 10 days of the month rose 11 percent compared to the same period in August.
Ahead of the MPOB data release, benchmark futures fell 1.7 percent to 2,359 ringgit ($721) per tonne by the midday break.
Investors are keeping a close watch on how the Middle East situation develops. A U.S. military strike on Syria could stir broader conflict in the Middle East which pumps a third of the world's oil supply and may cause a spike in crude oil prices.
Higher crude oil prices would shift demand to palm oil as a cheaper alternative to produce biodiesel.
The data could provide some near-term support to palm prices which have lost 3.2 percent so far this year. But any gains may not be sustainable as demand may not be enough to offset seasonally higher output in the coming months, traders said.
Oil palm trees seasonally produce more fresh fruit bunches in the second half of the year, paving the way for a larger supply of the vegetable oil to flow into the market and potentially crimp prices.
Production of the tropical oil was up by 3.6 percent to 1.74 million tonnes in August, data from the Malaysian Palm Oil Board (MPOB) showed on Tuesday, against a Reuters poll of plantation firms that had predicted a 5 percent rise.
Inventories rose 0.1 percent from end-July to 1.67 million tonnes, marking its highest level since May. The rise was below market estimates that stocks had grown by 4 percent to 1.73 million tonnes.
Exports rose 7.4 percent to 1.52 million tonnes, slightly below forecasts for 1.53 million tonnes, with Malaysia enjoying healthy demand from China as the world's second-largest palm oil buyer stocked up ahead of its Mid-Autumn festival in September.
The festive demand could trickle into early September. Cargo surveyor data released earlier on Tuesday showed shipments of Malaysian palm oil in the first 10 days of the month rose 11 percent compared to the same period in August.
Ahead of the MPOB data release, benchmark futures fell 1.7 percent to 2,359 ringgit ($721) per tonne by the midday break.
Investors are keeping a close watch on how the Middle East situation develops. A U.S. military strike on Syria could stir broader conflict in the Middle East which pumps a third of the world's oil supply and may cause a spike in crude oil prices.
Higher crude oil prices would shift demand to palm oil as a cheaper alternative to produce biodiesel.