MARKET DEVELOPMENT
Palm Oil Stockpiles Expand as Output Climbs Most in Eight Months
Palm Oil Stockpiles Expand as Output Climbs Most in Eight Months
11/04/2014 (Bloomberg) - Palm oil stockpiles in Malaysia unexpectedly expanded in March, snapping a two-month decline, as production in the world’s biggest supplier after Indonesia climbed by the most since July. Futures dropped.
Inventories rose 1.9 percent to 1.69 million metric tons from a month earlier, the Malaysian Palm Oil Board said today. The median of estimates in a Bloomberg survey was for a drop to 1.6 million tons. Output surged 17 percent to 1.5 million tons, more than the 1.42 million tons forecast, while exports fell 8 percent to 1.24 million tons, the lowest since February 2012.
The oil that’s used in everything from noodles to biofuel dropped from an 18-month high last month as rains eased concern that a period of dry weather earlier this year would cut yields. Output typically starts to increase in March after declining in the first two months of the year because of growing cycles.
“This is a seasonal pickup,” said Alvin Tai, an analyst at RHB Investment Bank in Kuala Lumpur. “There was also spillover production from February, because February was very dry, fruits couldn’t ripen. You need rain for fruits to ripen, so some of the production from February actually spilled over.”
Futures lost as much as 1.3 percent to 2,580 ringgit ($800) a ton on the Bursa Malaysia Derivatives, extending declines in the afternoon session after the data was released during the midday break in trading. The most-active contract was 0.7 percent lower at 2,594 ringgit at 3:33 p.m. in Kuala Lumpur.
Dry Weather
Inventories may drop this month as output in April won’t be as strong as March due to the lagged effect of a separate spell of dry weather a year ago, according to Tai. Exports should also start to increase again because of the widening spread to soybean oil, an alternative in food and fuel uses, he said.
Shipments from Malaysia rose 4.4 percent to 306,765 tons in the first 10 days of April from the same period last month, surveyor Intertek said today. Soybean oil was $136.64 a ton more expensive than palm today compared with $51.29 on Jan. 1.
Exports may begin to increase as demand grows from May onward due to restocking ahead of the Muslim fasting month of Ramadan, said Alan Lim Seong Chun, an analyst at Kenanga Investment Bank Bhd. Communal meals typically boost demand during the month, which this year starts at the end of June.
Imports jumped 83 percent to 15,140 tons in March from a month earlier, the board data showed.
Inventories rose 1.9 percent to 1.69 million metric tons from a month earlier, the Malaysian Palm Oil Board said today. The median of estimates in a Bloomberg survey was for a drop to 1.6 million tons. Output surged 17 percent to 1.5 million tons, more than the 1.42 million tons forecast, while exports fell 8 percent to 1.24 million tons, the lowest since February 2012.
The oil that’s used in everything from noodles to biofuel dropped from an 18-month high last month as rains eased concern that a period of dry weather earlier this year would cut yields. Output typically starts to increase in March after declining in the first two months of the year because of growing cycles.
“This is a seasonal pickup,” said Alvin Tai, an analyst at RHB Investment Bank in Kuala Lumpur. “There was also spillover production from February, because February was very dry, fruits couldn’t ripen. You need rain for fruits to ripen, so some of the production from February actually spilled over.”
Futures lost as much as 1.3 percent to 2,580 ringgit ($800) a ton on the Bursa Malaysia Derivatives, extending declines in the afternoon session after the data was released during the midday break in trading. The most-active contract was 0.7 percent lower at 2,594 ringgit at 3:33 p.m. in Kuala Lumpur.
Dry Weather
Inventories may drop this month as output in April won’t be as strong as March due to the lagged effect of a separate spell of dry weather a year ago, according to Tai. Exports should also start to increase again because of the widening spread to soybean oil, an alternative in food and fuel uses, he said.
Shipments from Malaysia rose 4.4 percent to 306,765 tons in the first 10 days of April from the same period last month, surveyor Intertek said today. Soybean oil was $136.64 a ton more expensive than palm today compared with $51.29 on Jan. 1.
Exports may begin to increase as demand grows from May onward due to restocking ahead of the Muslim fasting month of Ramadan, said Alan Lim Seong Chun, an analyst at Kenanga Investment Bank Bhd. Communal meals typically boost demand during the month, which this year starts at the end of June.
Imports jumped 83 percent to 15,140 tons in March from a month earlier, the board data showed.