MARKET DEVELOPMENT
UPDATE 1-Malaysia End-Sept Palm Stocks Rise to 4-Mth High, Below Expectations
UPDATE 1-Malaysia End-Sept Palm Stocks Rise to 4-Mth High, Below Expectations
10/10/2013 (Reuters) - Malaysia's palm oil end-stocks notched a smaller-than-expected rise in September as output of the tropical oil grew more slowly than anticipated, industry data showed on Thursday, likely supporting prices in the short-term.
But inventories could climb next month, planters said, with October poised to be the biggest producing month this year.
The tropical oil palm trees typically produce more fresh fruit bunches in the second half of the year, but a Muslim holiday curbed output in July-August and kept stocks in check.
Palm oil output rose 10.2 percent to 1.91 million tonnes in September, data from the Malaysian Palm Oil Board (MPOB) showed, below a 15 percent rise foreast in a Reuters poll of traders and plantation firms.
Exports were better than expected, rising 5.2 percent to 1.61 million tonnes, slightly above forecasts for 1.55 million tonnes of shipments.
Inventories rose 7 percent from end-August to 1.78 million tonnes, the highest level since May. The rise was below market estimates for stocks to grow 14.8 percent to 1.91 million tonnes.
"Stocks are quite friendly and it's below a lot of people's expectations," said a trader with a foreign commodities brokerage, who forecast a near-term rise in prices.
"There might be some knee-jerk reaction to these numbers because it has not been taken by the industry yet," the trader said.
Exports in the first ten days of October were "impressive" and could lend strength to prices, he said.
Some planters and traders expect Malaysian palm oil production to hit a new record high of 19.2 million tonnes this year, compared to 18.8 million tonnes in 2012. Top producer Indonesia forecasts its own output at 26.7 million tonnes.
The increased supply of palm oil would have to compete with anticipated bumper soybean crops from the U.S. and South America. Larger supplies of soybeans for crushing into soyoil could snatch demand away from rival palm oil.
But despite the quickening output and stocks rise, palm may get some respite from festive demand which drives up consumption of the tropical oil commonly used in many food products including biscuits, chocolate and ice cream.
Buyers from India, the world's biggest palm oil consumer, are expected to re-stock ahead of Muslim and Hindu religious festivals in November.
Cargo surveyor data released earlier on Thursday showed shipments of Malaysian palm oil in the first 10 days of the month rose 17 percent to 542,274 tonnes, compared with the same period in September, led by bigger purchases from the world's top two buyers India and China.
Ahead of the MPOB data release, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had edged down 0.1 percent to 2,367 ringgit ($738) per tonne by Thursday's midday break, snapping four straight days of gains.
But inventories could climb next month, planters said, with October poised to be the biggest producing month this year.
The tropical oil palm trees typically produce more fresh fruit bunches in the second half of the year, but a Muslim holiday curbed output in July-August and kept stocks in check.
Palm oil output rose 10.2 percent to 1.91 million tonnes in September, data from the Malaysian Palm Oil Board (MPOB) showed, below a 15 percent rise foreast in a Reuters poll of traders and plantation firms.
Exports were better than expected, rising 5.2 percent to 1.61 million tonnes, slightly above forecasts for 1.55 million tonnes of shipments.
Inventories rose 7 percent from end-August to 1.78 million tonnes, the highest level since May. The rise was below market estimates for stocks to grow 14.8 percent to 1.91 million tonnes.
"Stocks are quite friendly and it's below a lot of people's expectations," said a trader with a foreign commodities brokerage, who forecast a near-term rise in prices.
"There might be some knee-jerk reaction to these numbers because it has not been taken by the industry yet," the trader said.
Exports in the first ten days of October were "impressive" and could lend strength to prices, he said.
Some planters and traders expect Malaysian palm oil production to hit a new record high of 19.2 million tonnes this year, compared to 18.8 million tonnes in 2012. Top producer Indonesia forecasts its own output at 26.7 million tonnes.
The increased supply of palm oil would have to compete with anticipated bumper soybean crops from the U.S. and South America. Larger supplies of soybeans for crushing into soyoil could snatch demand away from rival palm oil.
But despite the quickening output and stocks rise, palm may get some respite from festive demand which drives up consumption of the tropical oil commonly used in many food products including biscuits, chocolate and ice cream.
Buyers from India, the world's biggest palm oil consumer, are expected to re-stock ahead of Muslim and Hindu religious festivals in November.
Cargo surveyor data released earlier on Thursday showed shipments of Malaysian palm oil in the first 10 days of the month rose 17 percent to 542,274 tonnes, compared with the same period in September, led by bigger purchases from the world's top two buyers India and China.
Ahead of the MPOB data release, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had edged down 0.1 percent to 2,367 ringgit ($738) per tonne by Thursday's midday break, snapping four straight days of gains.