MARKET DEVELOPMENT
PREVIEW-Malaysian Palm Oil Stocks Seen at 6-mth High in Sept
PREVIEW-Malaysian Palm Oil Stocks Seen at 6-mth High in Sept
08/10/2013 (Reuters) - Malaysian palm oil stocks may have jumped to their highest in six months in September as strong seasonal output outweighed robust export demand, a Reuters survey showed, pressuring prices that have already lost about 5 percent this year.
Inventory in the world's No.2 palm oil producer likely climbed to 1.91 million tonnes, the highest since April and up 14.8 percent from 1.67 million tonnes in August.
The survey of five planters and traders showed that production in September may have surged 15 percent from August to 2.0 million tonnes, with palm oil trees typically producing more fruit in the second half of the year and with August output curbed due to a major Muslim holiday.
"Production was up 25 percent in the first 20 days of September. I anticipate a big jump and thereby a fairly big stockbuild that will continue right up to December," an official at a plantation firm said in the survey.
"I think September, October and November will be very high-producing months. Eventually we'll have 2.3-2.4 million tonnes of stocks," the official added.
Exports of Malaysian palm oil likely grew 1.7 percent from a month ago to 1.55 million tonnes of shipments, according to the survey.
Local Consumption
The median of figures provided by respondents implied domestic consumption in September of around 230,000 tonnes. Consumption generally ranges from 150,000 to 180,000 tonnes.
Malaysian imports of crude palm oil from top producer Indonesia most likely rose to 30,000 tonnes in September from 6,950 tonnes in August.
Factors To Watch
Forecasts of surging Southeast Asian output alongside rising supply of competing global oilseeds dragged Bursa Malaysia Derivatives Exchange's palm oil benchmark futures down 3.5 percent in September.
Leading vegetable oil analysts have warned that palm oil prices are poised to fall deeper to four-year lows of 2,000 ringgit by early January if Brent crude drops below $100 per barrel and if a bumper soy crop in South America surfaces as expected. Brent futures edged down towards $109 a barrel on Monday.
Larger amounts of soybeans for crushing into rival soyoil could snatch demand away from palm oil, while cheaper crude oil would lure buyers away from using palm as a substitute for biofuels.
Some traders and planters say Malaysian palm oil production could hit a new record of 19.2 million tonnes this year compared to 18.79 million tonnes in 2012. Indonesia, the world's top producer, expects about 26.7 million tonnes this year.
The strength of the Malaysian ringgit could also continue to weigh on palm as it makes the ringgit-priced feedstock more expensive for overseas buyers and refiners.
The U.S. government shutdown triggered a rally of most emerging Asian currencies, including the ringgit which climbed as much as 1.1 percent when the news first broke.
But palm may get some respite from festive demand which drives up consumption of the tropical oil commonly used as an ingredient in food such as biscuits and chocolate.
Buyers from India, the world's biggest palm oil consumer, usually re-stock ahead of Muslim and Hindu religious festivals in November.
Indonesia will keep its export tax for crude palm oil at 9 percent for October, while Malaysia has decided to keep a more competitive export duty of 4.5 percent that has been in place since March.
Breakdown of September estimates (in tonnes):
Range Median*
Production 1,840,000 - 2,130,000 1,995,586
Exports 1,500,000 - 1,607,301 1,550,000
Imports 10,000 - 50,000 30,000
Closing stocks 1,670,000 - 1,950,000 1,912,000
* Official stocks of 1,665,592 tonnes for August, plus the above estimated output and imports give a total September supply of 3,691,178 tonnes. Based on the median of the export and closing stock estimates, Malaysia's domestic consumption in September would be 229,178 tonnes.
Inventory in the world's No.2 palm oil producer likely climbed to 1.91 million tonnes, the highest since April and up 14.8 percent from 1.67 million tonnes in August.
The survey of five planters and traders showed that production in September may have surged 15 percent from August to 2.0 million tonnes, with palm oil trees typically producing more fruit in the second half of the year and with August output curbed due to a major Muslim holiday.
"Production was up 25 percent in the first 20 days of September. I anticipate a big jump and thereby a fairly big stockbuild that will continue right up to December," an official at a plantation firm said in the survey.
"I think September, October and November will be very high-producing months. Eventually we'll have 2.3-2.4 million tonnes of stocks," the official added.
Exports of Malaysian palm oil likely grew 1.7 percent from a month ago to 1.55 million tonnes of shipments, according to the survey.
Local Consumption
The median of figures provided by respondents implied domestic consumption in September of around 230,000 tonnes. Consumption generally ranges from 150,000 to 180,000 tonnes.
Malaysian imports of crude palm oil from top producer Indonesia most likely rose to 30,000 tonnes in September from 6,950 tonnes in August.
Factors To Watch
Forecasts of surging Southeast Asian output alongside rising supply of competing global oilseeds dragged Bursa Malaysia Derivatives Exchange's palm oil benchmark futures down 3.5 percent in September.
Leading vegetable oil analysts have warned that palm oil prices are poised to fall deeper to four-year lows of 2,000 ringgit by early January if Brent crude drops below $100 per barrel and if a bumper soy crop in South America surfaces as expected. Brent futures edged down towards $109 a barrel on Monday.
Larger amounts of soybeans for crushing into rival soyoil could snatch demand away from palm oil, while cheaper crude oil would lure buyers away from using palm as a substitute for biofuels.
Some traders and planters say Malaysian palm oil production could hit a new record of 19.2 million tonnes this year compared to 18.79 million tonnes in 2012. Indonesia, the world's top producer, expects about 26.7 million tonnes this year.
The strength of the Malaysian ringgit could also continue to weigh on palm as it makes the ringgit-priced feedstock more expensive for overseas buyers and refiners.
The U.S. government shutdown triggered a rally of most emerging Asian currencies, including the ringgit which climbed as much as 1.1 percent when the news first broke.
But palm may get some respite from festive demand which drives up consumption of the tropical oil commonly used as an ingredient in food such as biscuits and chocolate.
Buyers from India, the world's biggest palm oil consumer, usually re-stock ahead of Muslim and Hindu religious festivals in November.
Indonesia will keep its export tax for crude palm oil at 9 percent for October, while Malaysia has decided to keep a more competitive export duty of 4.5 percent that has been in place since March.
Breakdown of September estimates (in tonnes):
Range Median*
Production 1,840,000 - 2,130,000 1,995,586
Exports 1,500,000 - 1,607,301 1,550,000
Imports 10,000 - 50,000 30,000
Closing stocks 1,670,000 - 1,950,000 1,912,000
* Official stocks of 1,665,592 tonnes for August, plus the above estimated output and imports give a total September supply of 3,691,178 tonnes. Based on the median of the export and closing stock estimates, Malaysia's domestic consumption in September would be 229,178 tonnes.