MARKET DEVELOPMENT
UPDATE 1-Malaysia's End-June Palm Stocks Fall on Lower Output
UPDATE 1-Malaysia's End-June Palm Stocks Fall on Lower Output
11/07/2017 (Reuters) - Malaysian palm oil stockpiles dipped at end-June as a fall in production during the Ramadan and Eid-Al-Fitr holidays outpaced a decline in exports, potentially boosting prices of the edible oil.
Inventories in the world's second-largest producer of the tropical oil fell to 1.53 million tonnes, down 1.9 percent from 1.56 million tonnes in May, data from the Malaysian Palm Oil Board (MPOB) showed on Monday.
It was the lowest June level since 2010. MYPOMS-TPO
Falling inventories could stoke further gains in benchmark palm oil prices, which have risen 4.7 percent so far this month. Palmoil surged 3.9 percent last week, tracking gains in related edible oils, and was up 0.8 percent at the midday break on Monday.
The fall in inventory came as workers went on leave for the the Ramadan and Eid festivals. June output fell 8.5 percent to 1.51 million tonnes, the MPOB data showed. MYPOMP-CPOTT
Indonesia and Malaysia, which produce nearly 90 percent of global palm oil, are both Muslim-majority countries that observe Ramadan and Eid, which marks the end of the fasting month.
"The production decline was more or less expected but everyone was expecting production levels to be higher. Output could be 10-15 percent higher (in July) as there is a lot of production from the last week of June coming into July," said a trader from Kuala Lumpur.
"On the surface the numbers look friendly, but going forward people have to find a place to sell their cargos. We will have some stock buildup from July to September," he said, referring to a forecast continued decline in demand due to an absence of festivities.
Shipments fell 8.4 percent to 1.38 million tonnes, according to the MPOB data, the first fall in four months as the seasonal demands of Ramadan faded. MYPOME-PO
Ramadan and Eid typicall lead to higher palm oil usage for cooking purposes. Buyers typically stock up on palm oil a month before Ramadan, which began in late May this year.
"Exports fell in line with expectations. Moving forward we could see some delay in shipments to India as their goods and services tax kicks in," said David Ng, derivatives specialist at Phillip Futures in Kuala Lumpur.
"Overall demand is expected to be moderate but we hope to see China buy back in the next two months as they bring their stocks up to average levels."
A Thomson Reuters poll had forecast a slight gain in end-stocks of 0.2 percent to 1.56 million tonnes in June. Production was seen down 2.1 percent at 1.62 million tonnes,while exports were estimated to fall 8.2 percent to 1.38 million tonnes.
The following is a breakdown of Malaysian Palm Oil Board figures and Reuters estimates for June:
(volumes in tonnes)
June 2017 June 2017 poll June 2016 May 2017
Output 1,514,170 1,620,000 1,532,613 1,654,494
Stocks 1,527,043 1,560,000 1,774,625 1,557,036*
Exports 1,379,691 1,382,000 1,141,832 1,506,056*
Imports 45,828 50,000 19,636 47,450
*denotes revised figures
Inventories in the world's second-largest producer of the tropical oil fell to 1.53 million tonnes, down 1.9 percent from 1.56 million tonnes in May, data from the Malaysian Palm Oil Board (MPOB) showed on Monday.
It was the lowest June level since 2010. MYPOMS-TPO
Falling inventories could stoke further gains in benchmark palm oil prices, which have risen 4.7 percent so far this month. Palmoil surged 3.9 percent last week, tracking gains in related edible oils, and was up 0.8 percent at the midday break on Monday.
The fall in inventory came as workers went on leave for the the Ramadan and Eid festivals. June output fell 8.5 percent to 1.51 million tonnes, the MPOB data showed. MYPOMP-CPOTT
Indonesia and Malaysia, which produce nearly 90 percent of global palm oil, are both Muslim-majority countries that observe Ramadan and Eid, which marks the end of the fasting month.
"The production decline was more or less expected but everyone was expecting production levels to be higher. Output could be 10-15 percent higher (in July) as there is a lot of production from the last week of June coming into July," said a trader from Kuala Lumpur.
"On the surface the numbers look friendly, but going forward people have to find a place to sell their cargos. We will have some stock buildup from July to September," he said, referring to a forecast continued decline in demand due to an absence of festivities.
Shipments fell 8.4 percent to 1.38 million tonnes, according to the MPOB data, the first fall in four months as the seasonal demands of Ramadan faded. MYPOME-PO
Ramadan and Eid typicall lead to higher palm oil usage for cooking purposes. Buyers typically stock up on palm oil a month before Ramadan, which began in late May this year.
"Exports fell in line with expectations. Moving forward we could see some delay in shipments to India as their goods and services tax kicks in," said David Ng, derivatives specialist at Phillip Futures in Kuala Lumpur.
"Overall demand is expected to be moderate but we hope to see China buy back in the next two months as they bring their stocks up to average levels."
A Thomson Reuters poll had forecast a slight gain in end-stocks of 0.2 percent to 1.56 million tonnes in June. Production was seen down 2.1 percent at 1.62 million tonnes,while exports were estimated to fall 8.2 percent to 1.38 million tonnes.
The following is a breakdown of Malaysian Palm Oil Board figures and Reuters estimates for June:
(volumes in tonnes)
June 2017 June 2017 poll June 2016 May 2017
Output 1,514,170 1,620,000 1,532,613 1,654,494
Stocks 1,527,043 1,560,000 1,774,625 1,557,036*
Exports 1,379,691 1,382,000 1,141,832 1,506,056*
Imports 45,828 50,000 19,636 47,450
*denotes revised figures