MARKET DEVELOPMENT
Malaysian Palm Reserves Jump Most Since ‘09 on Record Output
Malaysian Palm Reserves Jump Most Since ‘09 on Record Output
11/09/2014 (Bloomberg) - Palm oil stockpiles in Malaysia, the top producer after Indonesia, surged in August by the most in almost five years as output for the month rose to a record.
Reserves jumped 22 percent to 2.05 million metric tons in August from a month earlier, the biggest percentage increase since October 2009, Malaysian Palm Oil Board data show. The median of estimates in a Bloomberg survey was for a 16 percent increase to 1.95 million tons. Inventories were last above 2 million tons in March 2013. Output advanced 22 percent to 2.03 million tons, an all-time monthly high. Exports fell 0.4 percent to 1.44 million tons.
Palm, used in food and biofuels, plunged into a bear market in July to reach a five-year low this month on swelling global supplies of edible oils, including a record U.S. soybean harvest. Prices risk tumbling further to approach output costs, according to Dorab Mistry, director at Godrej International Ltd. To help boost shipments and curb stockpile expansion, Malaysia scrapped an export tax last week for two months.
“The Malaysian government was probably aware of this and that’s why they decided to cut the export tax,” Ivy Ng, an analyst at CIMB Investment Bank Bhd., said in Kuala Lumpur today. “With stock levels so high, buyers will not rush in aggressively.”
Five-Year Low
Futures slumped as much as 1.8 percent to 1,997 ringgit ($624) a ton on Bursa Malaysia Derivatives today before closing little changed at 2,033 ringgit. The most-active contract touched 1,914 ringgit on Sept. 2, the lowest since March 2009. Soybean oil’s premium to palm has averaged $92 a ton this year from $244 in 2013, data compiled by Bloomberg show.
Shipments of crude palm oil in September and October will not attract a levy, the Ministry of Plantation Industries and Commodities said in a statement Sept. 4. The government earlier set the tax at 4.5 percent for September. The tariff exemption will increase exports by 600,000 tons and help contain stockpiles at 1.6 million tons by year-end, it said.
Exports surged 41 percent to 487,955 tons in the first 10 days of this month from the same period in August, surveyor Intertek said today.
While demand prospects may improve in the fourth quarter as the high-production season ends in October, the record U.S. soybean crop and abundant global vegetable oil supplies will limit gains, Rabobank International analysts including Pawan Kumar said in a report Sept. 1.
Soybean oil futures in Chicago plunged to 31.52 cents a pound today, the lowest since 2009. U.S. farmers will collect a record 3.816 billion bushels of soybeans this year, according to the Department of Agriculture.
Reserves jumped 22 percent to 2.05 million metric tons in August from a month earlier, the biggest percentage increase since October 2009, Malaysian Palm Oil Board data show. The median of estimates in a Bloomberg survey was for a 16 percent increase to 1.95 million tons. Inventories were last above 2 million tons in March 2013. Output advanced 22 percent to 2.03 million tons, an all-time monthly high. Exports fell 0.4 percent to 1.44 million tons.
Palm, used in food and biofuels, plunged into a bear market in July to reach a five-year low this month on swelling global supplies of edible oils, including a record U.S. soybean harvest. Prices risk tumbling further to approach output costs, according to Dorab Mistry, director at Godrej International Ltd. To help boost shipments and curb stockpile expansion, Malaysia scrapped an export tax last week for two months.
“The Malaysian government was probably aware of this and that’s why they decided to cut the export tax,” Ivy Ng, an analyst at CIMB Investment Bank Bhd., said in Kuala Lumpur today. “With stock levels so high, buyers will not rush in aggressively.”
Five-Year Low
Futures slumped as much as 1.8 percent to 1,997 ringgit ($624) a ton on Bursa Malaysia Derivatives today before closing little changed at 2,033 ringgit. The most-active contract touched 1,914 ringgit on Sept. 2, the lowest since March 2009. Soybean oil’s premium to palm has averaged $92 a ton this year from $244 in 2013, data compiled by Bloomberg show.
Shipments of crude palm oil in September and October will not attract a levy, the Ministry of Plantation Industries and Commodities said in a statement Sept. 4. The government earlier set the tax at 4.5 percent for September. The tariff exemption will increase exports by 600,000 tons and help contain stockpiles at 1.6 million tons by year-end, it said.
Exports surged 41 percent to 487,955 tons in the first 10 days of this month from the same period in August, surveyor Intertek said today.
While demand prospects may improve in the fourth quarter as the high-production season ends in October, the record U.S. soybean crop and abundant global vegetable oil supplies will limit gains, Rabobank International analysts including Pawan Kumar said in a report Sept. 1.
Soybean oil futures in Chicago plunged to 31.52 cents a pound today, the lowest since 2009. U.S. farmers will collect a record 3.816 billion bushels of soybeans this year, according to the Department of Agriculture.