MARKET DEVELOPMENT
Palm Oil Output in Malaysia Slumps Most Since 2006 on Floods
Palm Oil Output in Malaysia Slumps Most Since 2006 on Floods
12/01/2015 (Bloomberg) - After the deluge, the reckoning. Palm oil output in Malaysia fell by the most in eight years after floods hit plantations in the second-largest producer, according to official data that showed a bigger decline than expected.
Output tumbled 22 percent to 1.36 million metric tons last month from November, the biggest drop since December 2006, the Palm Oil Board said today. That compares with a 1.46 million-ton estimate in a Bloomberg survey published last week. Reserves fell 12 percent to 2.01 million tons, smaller than the 2.05 million ton median estimate. Exports rose 0.4 percent to 1.52 million tons, while the survey showed a 2 percent drop.
Futures surged to a six-month high last week on concerns that the worst floods in decades in Peninsular Malaysia hurt harvesting, exacerbating the impact of a seasonal decline in output in the world’s most-used edible oil. The heavier-than-usual monsoon rains displaced hundreds of thousands, while damaging roads and bridges. Production may also be weaker in January and February, according to Chandran Sinnasamy, executive director at LT International Futures.
“The tightness in nearby oil supplies will support the price,” Chandran said by phone from Kuala Lumpur. “At the same time, poor exports for the current month will limit the gains.”
Futures rose as much as 0.6 percent to 2,361 ringgit ($664) a ton on Bursa Malaysia Derivatives today and ended the morning session 0.2 percent higher at 2,352 ringgit. Prices climbed to 2,383 ringgit on Jan. 9, highest level since July.
Lagged Impact
Exports dropped 13 percent to 355,846 tons in the first 10 days of January from the same period a month earlier, surveyor Intertek said today. Malaysia’s palm imports fell 8.7 percent to 90,353 tons last month from November, board data showed.
The year-end monsoon that hit the east coast of Peninsular Malaysia resulted in the worst floods since 1972, according to Maybank Investment Bank Bhd. Prolonged flooding and heavy rain will result in lower yields in the months to come as pollination will be affected, with a lagged impact on production, although it’s hard to quantify, analyst Ong Chee Ting, wrote in a report dated Jan. 6.
Output in the three east coast states on Peninsular Malaysia hit by floods -- Kelantan, Terengganu and Pahang -- fell 28 percent in December from a year earlier, board data show. Production for the whole country climbed 2.3 percent to 19.67 million tons in 2014 from 19.22 million tons in 2013.
Isolated rains and thunderstorms are predicted over parts of Sabah and Sarawak until Jan. 18, while Johor may see intermittent showers, the Malaysian Meteorological Department said on its website. The three states are the largest producers in the country.
Output tumbled 22 percent to 1.36 million metric tons last month from November, the biggest drop since December 2006, the Palm Oil Board said today. That compares with a 1.46 million-ton estimate in a Bloomberg survey published last week. Reserves fell 12 percent to 2.01 million tons, smaller than the 2.05 million ton median estimate. Exports rose 0.4 percent to 1.52 million tons, while the survey showed a 2 percent drop.
Futures surged to a six-month high last week on concerns that the worst floods in decades in Peninsular Malaysia hurt harvesting, exacerbating the impact of a seasonal decline in output in the world’s most-used edible oil. The heavier-than-usual monsoon rains displaced hundreds of thousands, while damaging roads and bridges. Production may also be weaker in January and February, according to Chandran Sinnasamy, executive director at LT International Futures.
“The tightness in nearby oil supplies will support the price,” Chandran said by phone from Kuala Lumpur. “At the same time, poor exports for the current month will limit the gains.”
Futures rose as much as 0.6 percent to 2,361 ringgit ($664) a ton on Bursa Malaysia Derivatives today and ended the morning session 0.2 percent higher at 2,352 ringgit. Prices climbed to 2,383 ringgit on Jan. 9, highest level since July.
Lagged Impact
Exports dropped 13 percent to 355,846 tons in the first 10 days of January from the same period a month earlier, surveyor Intertek said today. Malaysia’s palm imports fell 8.7 percent to 90,353 tons last month from November, board data showed.
The year-end monsoon that hit the east coast of Peninsular Malaysia resulted in the worst floods since 1972, according to Maybank Investment Bank Bhd. Prolonged flooding and heavy rain will result in lower yields in the months to come as pollination will be affected, with a lagged impact on production, although it’s hard to quantify, analyst Ong Chee Ting, wrote in a report dated Jan. 6.
Output in the three east coast states on Peninsular Malaysia hit by floods -- Kelantan, Terengganu and Pahang -- fell 28 percent in December from a year earlier, board data show. Production for the whole country climbed 2.3 percent to 19.67 million tons in 2014 from 19.22 million tons in 2013.
Isolated rains and thunderstorms are predicted over parts of Sabah and Sarawak until Jan. 18, while Johor may see intermittent showers, the Malaysian Meteorological Department said on its website. The three states are the largest producers in the country.