MARKET DEVELOPMENT
PREVIEW-Malaysia Nov Palm Stocks Likely Climbed As Exports Slipped
PREVIEW-Malaysia Nov Palm Stocks Likely Climbed As Exports Slipped
06/12/2013 (Reuters) - Malaysian palm oil stocks likely rose in November, a Reuters survey showed, as a dent in production did little to offset softer winter demand for the tropical oil.
Demand for palm oil typically dwindles as the northern winter approaches and buyers cut back purchases of palm oil because it solidifies in cold temperatures, opting for rival edible oils such as soyoil instead.
But the rise in stocks, estimated to be at their highest since March, was limited by the onset of a monsoon season that hampered output in some parts of second-largest grower Malaysia.
A survey of five planters and traders showed that inventories likely rose to 1.98 million tonnes in November, a 7.2 percent increase from October's 1.85 million tonnes.
November production could have fallen by 1 percent from October to 1.95 million tonnes as palm's seasonal peak faded and wet weather complicated harvesting.
The market had initially expected November's output to fall more steeply, but planters said the rains could have instead encouraged yields of fresh fruit bunches.
"Generally production has been excellent in November for our operations in Malaysia and Indonesia," an official at a plantation firm told Reuters.
Exports were seen falling 4.0 percent from a month ago to 1.59 million tonnes, according to the survey.
Cargo surveyors earlier this week reported that Malaysian palm oil shipments fell between 4.8 and 4.9 percent on weaker demand for refined palm olein typically used in cooking oil.
LOCAL CONSUMPTION
The median figure from respondents implied domestic consumption in October of around 246,749 tonnes. Consumption generally ranges from 150,000 to 180,000 tonnes.
Malaysian imports of palm oil products likely slipped to 20,028 tonnes in November from 22,503 tonnes in October.
FACTORS TO WATCH
The Bursa Malaysia Derivatives Exchange's palm oil benchmark futures rose 2.4 percent in November -- after rising more than 10 percent in October -- lifted by hopes of weaker output in Malaysia and Indonesia, which together account for nearly all of the world's palm oil supply.
Palm prices also firmed after a deadly typhoon in thePhilippines sparked fears of a coconut oil shortage from the world's No.1 exporter, driving buyers to seek palm oil-based alternatives.
Rising demand for biofuels could help lift prices to 3,000 ringgit ($930) per tonne in March 2014, leading vegetable oil analyst Dorab Mistry said at an industry meet, buoyed by higher biodiesel mandates in Indonesia, Malaysia and soy-producing Brazil and Argentina.
Palm oil futures are currently running just over 2,600 ringgit.
Industry regulator the Malaysian Palm Oil Board said palm oil stocks in Malaysia could fall to 1.87 million tonnes by end-2013, down nearly 30 percent from last year, and decline further in the coming year as foreign and domestic demand for the edible oil outpaces production.
Output in Malaysia has faltered after monsoon floods hit major palm-growing states Johor and Pahang. Flooding makes harvesting more difficult and palm fruit can't be trucked to mills as roads from the plantation are often impassable.
Malaysia's Meteorological Department has warned that flood waters could take days to recede. As of Thursday, more than 30,000 people in flood-hit states had been evacuated.
But some planters say output might not see a steep drop unless the bad weather stretches out.
"I think output in December could be down by 3 percent, but it's too early to say. There's some flooding now, but if it disappears in the next two weeks then there's no problem," the official at a plantation firm added.
Breakdown of November's estimates (in tonnes):
Range Median*
Production 1,930,000 - 2,070,861 1,952,527
Exports 1,550,000 - 1,659,105 1,592,741
Imports 10,000 - 22,503 20,028
Closing stocks 1,900,671 - 2,015,000 1,978,647
* Official stocks of 1,845,312 tonnes for October, plus the above estimated output and imports give a total November supply of 3,817,867 tonnes. Based on the median of the export and closing stock estimates, Malaysia's domestic consumption in November would be 246,479 tonnes.
($1 = 3.2245 Malaysian ringgit)
Demand for palm oil typically dwindles as the northern winter approaches and buyers cut back purchases of palm oil because it solidifies in cold temperatures, opting for rival edible oils such as soyoil instead.
But the rise in stocks, estimated to be at their highest since March, was limited by the onset of a monsoon season that hampered output in some parts of second-largest grower Malaysia.
A survey of five planters and traders showed that inventories likely rose to 1.98 million tonnes in November, a 7.2 percent increase from October's 1.85 million tonnes.
November production could have fallen by 1 percent from October to 1.95 million tonnes as palm's seasonal peak faded and wet weather complicated harvesting.
The market had initially expected November's output to fall more steeply, but planters said the rains could have instead encouraged yields of fresh fruit bunches.
"Generally production has been excellent in November for our operations in Malaysia and Indonesia," an official at a plantation firm told Reuters.
Exports were seen falling 4.0 percent from a month ago to 1.59 million tonnes, according to the survey.
Cargo surveyors earlier this week reported that Malaysian palm oil shipments fell between 4.8 and 4.9 percent on weaker demand for refined palm olein typically used in cooking oil.
LOCAL CONSUMPTION
The median figure from respondents implied domestic consumption in October of around 246,749 tonnes. Consumption generally ranges from 150,000 to 180,000 tonnes.
Malaysian imports of palm oil products likely slipped to 20,028 tonnes in November from 22,503 tonnes in October.
FACTORS TO WATCH
The Bursa Malaysia Derivatives Exchange's palm oil benchmark futures rose 2.4 percent in November -- after rising more than 10 percent in October -- lifted by hopes of weaker output in Malaysia and Indonesia, which together account for nearly all of the world's palm oil supply.
Palm prices also firmed after a deadly typhoon in thePhilippines sparked fears of a coconut oil shortage from the world's No.1 exporter, driving buyers to seek palm oil-based alternatives.
Rising demand for biofuels could help lift prices to 3,000 ringgit ($930) per tonne in March 2014, leading vegetable oil analyst Dorab Mistry said at an industry meet, buoyed by higher biodiesel mandates in Indonesia, Malaysia and soy-producing Brazil and Argentina.
Palm oil futures are currently running just over 2,600 ringgit.
Industry regulator the Malaysian Palm Oil Board said palm oil stocks in Malaysia could fall to 1.87 million tonnes by end-2013, down nearly 30 percent from last year, and decline further in the coming year as foreign and domestic demand for the edible oil outpaces production.
Output in Malaysia has faltered after monsoon floods hit major palm-growing states Johor and Pahang. Flooding makes harvesting more difficult and palm fruit can't be trucked to mills as roads from the plantation are often impassable.
Malaysia's Meteorological Department has warned that flood waters could take days to recede. As of Thursday, more than 30,000 people in flood-hit states had been evacuated.
But some planters say output might not see a steep drop unless the bad weather stretches out.
"I think output in December could be down by 3 percent, but it's too early to say. There's some flooding now, but if it disappears in the next two weeks then there's no problem," the official at a plantation firm added.
Breakdown of November's estimates (in tonnes):
Range Median*
Production 1,930,000 - 2,070,861 1,952,527
Exports 1,550,000 - 1,659,105 1,592,741
Imports 10,000 - 22,503 20,028
Closing stocks 1,900,671 - 2,015,000 1,978,647
* Official stocks of 1,845,312 tonnes for October, plus the above estimated output and imports give a total November supply of 3,817,867 tonnes. Based on the median of the export and closing stock estimates, Malaysia's domestic consumption in November would be 246,479 tonnes.
($1 = 3.2245 Malaysian ringgit)