MARKET DEVELOPMENT
Palm Oil Reserves in Malaysia Seen Dropping for Fifth Month
Palm Oil Reserves in Malaysia Seen Dropping for Fifth Month
06/06/2013 (Bloomberg) - Palm oil inventories in Malaysia, the world’s second-largest producer, probably fell for a fifth month in May to the lowest level in almost a year, according to a Bloomberg survey. Futures climbed to a two-month high.
Stockpiles dropped 3.5 percent to 1.86 million metric tons, the least since June 2012, the median of estimates from two plantation companies and three analysts showed. Output rose 4.6 percent to 1.43 million tons and exports declined 2 percent to 1.42 million tons, the survey showed. The data are due for release on June 10.
Palm oil prices have lost 19 percent over the past year as supply outpaced demand for the commodity used in everything from biofuels to noodles. While prices may gain this month as demand grows ahead of the Muslim fasting month of Ramadan in July, they will resume the decline after that as output climbs and reserves rebound, according to Dorab Mistry, a Godrej International Ltd. director who’s traded the commodity for more than 30 years.
“We’re not really seeing a drawdown in inventories globally, what we’re seeing is a reallocation of inventories away from Malaysia into China and India,” said Abah Ofon, an analyst at Standard Chartered Plc in Singapore. “That may put a damper on how much more can be absorbed by these two big importers over the next two months.”
India’s cooking oil stockpiles were 1.8 million tons on May 1 compared with 1.56 million tons a year earlier and a record 2.12 million tons in March, according to the Solvent Extractors’ Association of India. Palm oil inventories at major ports in China rose to a record, exceeding 1.5 million tons in the week of May 10, according to China Cereals & Oils Business Net.
Monthly Gain
Palm oil for delivery in August advanced 1.1 percent to 2,401 ringgit ($779) a ton on the Bursa Malaysia Derivatives, the highest price at close for most-active futures since March 28. Prices gained 4.9 percent in May, snapping a run of three monthly losses.
“Stockpiles could just range between 1.8 million to 2.1 million tons from now until the end of the year,” Arhnue Tan, an analyst at Alliance Investment Bank Bhd., said by phone. Prices may average at 2,600 ringgit a ton over the rest of 2013, Tan said in a report yesterday.
While Ramadan is expected to help maintain buying interest from importers, higher levels of stockpiles in India and China may limit the upside in prices, Rabobank International analysts led by Luke Chandler said in a report e-mailed on May 23. Communal meals during the month lift palm oil consumption.
Stockpiles dropped 3.5 percent to 1.86 million metric tons, the least since June 2012, the median of estimates from two plantation companies and three analysts showed. Output rose 4.6 percent to 1.43 million tons and exports declined 2 percent to 1.42 million tons, the survey showed. The data are due for release on June 10.
Palm oil prices have lost 19 percent over the past year as supply outpaced demand for the commodity used in everything from biofuels to noodles. While prices may gain this month as demand grows ahead of the Muslim fasting month of Ramadan in July, they will resume the decline after that as output climbs and reserves rebound, according to Dorab Mistry, a Godrej International Ltd. director who’s traded the commodity for more than 30 years.
“We’re not really seeing a drawdown in inventories globally, what we’re seeing is a reallocation of inventories away from Malaysia into China and India,” said Abah Ofon, an analyst at Standard Chartered Plc in Singapore. “That may put a damper on how much more can be absorbed by these two big importers over the next two months.”
India’s cooking oil stockpiles were 1.8 million tons on May 1 compared with 1.56 million tons a year earlier and a record 2.12 million tons in March, according to the Solvent Extractors’ Association of India. Palm oil inventories at major ports in China rose to a record, exceeding 1.5 million tons in the week of May 10, according to China Cereals & Oils Business Net.
Monthly Gain
Palm oil for delivery in August advanced 1.1 percent to 2,401 ringgit ($779) a ton on the Bursa Malaysia Derivatives, the highest price at close for most-active futures since March 28. Prices gained 4.9 percent in May, snapping a run of three monthly losses.
“Stockpiles could just range between 1.8 million to 2.1 million tons from now until the end of the year,” Arhnue Tan, an analyst at Alliance Investment Bank Bhd., said by phone. Prices may average at 2,600 ringgit a ton over the rest of 2013, Tan said in a report yesterday.
While Ramadan is expected to help maintain buying interest from importers, higher levels of stockpiles in India and China may limit the upside in prices, Rabobank International analysts led by Luke Chandler said in a report e-mailed on May 23. Communal meals during the month lift palm oil consumption.