MARKET DEVELOPMENT
Palm Oil Stockpiles Fall to Lowest in 11 Months as Output Slows
Palm Oil Stockpiles Fall to Lowest in 11 Months as Output Slows
10/06/2013 (Bloomberg) - Palm oil stockpiles in Malaysia, the world’s second-largest producer, fell for a fifth straight month in May to the lowest level in 11 months as production growth slowed, according to official data.
Inventories dropped 5.1 percent to 1.82 million metric tons from a revised 1.91 million tons in April, the lowest level since June 2012, the Malaysian Palm Oil Board said today. That was less than the median estimate of 1.86 million tons in a Bloomberg survey. Output climbed 1.3 percent to 1.38 million tons, while exports fell 3 percent to 1.41 million tons, the board said.
Futures have climbed for five straight weeks on speculation that a pick up in demand for the commodity used in everything from biofuels to noodles ahead of the Muslim fasting month of Ramadan in July may trim stockpiles. Prices will resume a decline as output climbs and reserves rebound, according to Dorab Mistry, a director at Godrej International Ltd., who’s traded the commodity for more than 30 years.
“Prices will trade higher because of the strong export numbers for the first 10 days of this month,” said Ivy Ng, an analyst at CIMB Investment Bank Bhd. in Kuala Lumpur. “That should keep the positive sentiment going with more conviction that perhaps we could see another month of flat-to-lower stocks.”
Shipments from Malaysia gained 10 percent to 419,035 tons in the first 10 days of June from 380,047 tons in the same period last month, Intertek said today.
Palm oil for August delivery climbed as much as 0.5 percent to 2,470 ringgit ($790) ton on the Bursa Malaysia Derivatives, and ended the morning session little changed at 2,458 ringgit before the release of the data. Prices closed at 2,457 ringgit on June 7, the highest settlement level for the most-active futures since March 25.
Inventories dropped 5.1 percent to 1.82 million metric tons from a revised 1.91 million tons in April, the lowest level since June 2012, the Malaysian Palm Oil Board said today. That was less than the median estimate of 1.86 million tons in a Bloomberg survey. Output climbed 1.3 percent to 1.38 million tons, while exports fell 3 percent to 1.41 million tons, the board said.
Futures have climbed for five straight weeks on speculation that a pick up in demand for the commodity used in everything from biofuels to noodles ahead of the Muslim fasting month of Ramadan in July may trim stockpiles. Prices will resume a decline as output climbs and reserves rebound, according to Dorab Mistry, a director at Godrej International Ltd., who’s traded the commodity for more than 30 years.
“Prices will trade higher because of the strong export numbers for the first 10 days of this month,” said Ivy Ng, an analyst at CIMB Investment Bank Bhd. in Kuala Lumpur. “That should keep the positive sentiment going with more conviction that perhaps we could see another month of flat-to-lower stocks.”
Shipments from Malaysia gained 10 percent to 419,035 tons in the first 10 days of June from 380,047 tons in the same period last month, Intertek said today.
Palm oil for August delivery climbed as much as 0.5 percent to 2,470 ringgit ($790) ton on the Bursa Malaysia Derivatives, and ended the morning session little changed at 2,458 ringgit before the release of the data. Prices closed at 2,457 ringgit on June 7, the highest settlement level for the most-active futures since March 25.