MARKET DEVELOPMENT
Wetter October Seen Curbing Malaysian Palm Oil Output
Wetter October Seen Curbing Malaysian Palm Oil Output
07/10/2014 7 (Reuters) - Malaysia's palm oil outputmay ease in October as wet weather delays harvesting and reducesoil extraction rates from fresh fruit bunches, planters andtraders said, indicating production growth could have peaked twomonths ahead of schedule in August.
Lower output by the world's No.2 palm oil producer may helpeat into stockpiles that have spilled over the 2 million tonnemark recently and underpin prices of the tropical oil that haveslumped 18 percent this year amid a global glut of edible oils.
"Looking at the rainfall, I doubt palm oil production willpeak in October," said Lingam Supramaniam, director atMalaysia-based commodities firm Pelindung Bestari.
"I think the best we saw was August. From September, it'salready on the downward trend," he added.
The benchmark contract on the Bursa Malaysia DerivativesExchange has started showing signs of recovery with again of about 14 percent from a more than five-year low of 1,914ringgit ($587.48) per tonne hit early last month.
Malaysia is currently facing an "inter-monsoon season", or ashift from the drier southwest monsoon to the rainy northeastmonsoon, that will last until early or middle November and ismarked by frequent thunderstorms in the afternoon, Ambun Dindangfrom the Malaysian Meteorological Department said.
"Generally, compared to September, we can say October willbe more wet," he told Reuters, adding that October's mean valueof rainfall expected over Peninsular Malaysia is 200-300mm, and200-250mm for the states of Sabah and Sarawak.
Rains and thunderstorms over oil palm-growing areas couldforce planters to delay harvesting and leave palm fruits ontrees longer, driving up their free fatty acid (FFA) content, aswell as complicate transportation of plucked bunches to mills.
A higher FFA content degrades the quality of oil produced.
Market players had initially expected crude palm oilproduction to dip slightly in September, resting after a 22percent surge in August, before picking up again in October.
Dindang added that despite forecasts of an El Nino at theend of the year, signs of the drought-inducing weatherphenomenon has yet to materialize over Malaysia.
"El Nino has not been established yet. The signs are notthere yet, even though the forecast has been given byinternational agencies," he said.
Meteorology experts have pared down expectations of an ElNino. The World Meteorological Organization last month said itnow sees less chance of El Nino conditions forming this yearthan it did three months ago, and expects only a weak event ifit occurs at all.
The Australian Bureau of Meteorology said the chance of anEl Nino occurring by end 2014 is 50 percent.
($1 = 3.2580 Malaysian ringgit)
Lower output by the world's No.2 palm oil producer may helpeat into stockpiles that have spilled over the 2 million tonnemark recently and underpin prices of the tropical oil that haveslumped 18 percent this year amid a global glut of edible oils.
"Looking at the rainfall, I doubt palm oil production willpeak in October," said Lingam Supramaniam, director atMalaysia-based commodities firm Pelindung Bestari.
"I think the best we saw was August. From September, it'salready on the downward trend," he added.
The benchmark contract on the Bursa Malaysia DerivativesExchange has started showing signs of recovery with again of about 14 percent from a more than five-year low of 1,914ringgit ($587.48) per tonne hit early last month.
Malaysia is currently facing an "inter-monsoon season", or ashift from the drier southwest monsoon to the rainy northeastmonsoon, that will last until early or middle November and ismarked by frequent thunderstorms in the afternoon, Ambun Dindangfrom the Malaysian Meteorological Department said.
"Generally, compared to September, we can say October willbe more wet," he told Reuters, adding that October's mean valueof rainfall expected over Peninsular Malaysia is 200-300mm, and200-250mm for the states of Sabah and Sarawak.
Rains and thunderstorms over oil palm-growing areas couldforce planters to delay harvesting and leave palm fruits ontrees longer, driving up their free fatty acid (FFA) content, aswell as complicate transportation of plucked bunches to mills.
A higher FFA content degrades the quality of oil produced.
Market players had initially expected crude palm oilproduction to dip slightly in September, resting after a 22percent surge in August, before picking up again in October.
Dindang added that despite forecasts of an El Nino at theend of the year, signs of the drought-inducing weatherphenomenon has yet to materialize over Malaysia.
"El Nino has not been established yet. The signs are notthere yet, even though the forecast has been given byinternational agencies," he said.
Meteorology experts have pared down expectations of an ElNino. The World Meteorological Organization last month said itnow sees less chance of El Nino conditions forming this yearthan it did three months ago, and expects only a weak event ifit occurs at all.
The Australian Bureau of Meteorology said the chance of anEl Nino occurring by end 2014 is 50 percent.
($1 = 3.2580 Malaysian ringgit)