MARKET DEVELOPMENT
Indonesian Palm Oil Reserves Shrinking Most in 19 Months
Indonesian Palm Oil Reserves Shrinking Most in 19 Months
21/10/2014 (Bloomberg) - Palm oil stockpiles in Indonesia probably slumped last month by the most since February 2013 as a dry spell reduced output in the largest supplier. Futures rose.
Inventories dropped 12 percent from August to 2.2 million metric tons, according to the median of six estimates from planters, traders, analysts and refiners compiled by Bloomberg. Production fell 9.8 percent to 2.3 million tons, the biggest decline this year, the median of five estimates shows.
Futures plunged 20 percent this year on swelling global supplies of cooking oils, including a record U.S. soybean harvest. That spurred Indonesia and Malaysia, which is the second-largest producer, to waive export duties. Dry conditions last month will worsen the impact on yields from a drought in the first quarter, according to PT Mandiri Sekuritas.
“The effect from the drought at the start of the year has begun to materialize,” said Hariyanto Wijaya, a Jakarta-based analyst at Mandiri Sekuritas. “The first-quarter dryness, coupled with very dry conditions in September, have really hurt output. Production may have peaked,” he said by phone Oct. 17.
Futures rose 0.4 percent to 2,139 ringgit ($656) a ton on Bursa Malaysia Derivatives today, after touching 1,914 ringgit on Sept. 2, the lowest since 2009. Shipments fell to 1.696 million tons in September from 1.72 million tons a month earlier, the Indonesian Palm Oil Association, known as Gapki, said in a statement today. That compares with the median estimate of 1.7 million tons in the survey.
Zero Tax
Shipments declined as some exporters deferred sales to October to benefit from the zero tax rate, said Joelianto, trading director at PT Sinar Mas Agro Resources & Technology. Exports to India, the top buyer, fell 38 percent to 305,330 tons and shipments to China, the second-biggest importer, dropped 31 percent to 56,260 tons, Gapki said in the statement.
Malaysia scrapped the export tax for two months in September and will extend the waiver until December, Prime Minister Najib Razak said Oct. 10. Reserves in the country expanded last month to the highest since March 2013 even as production dropped, palm oil board data show.
Indonesia cut the levy from 9 percent in September. The country sets the monthly export tariff according to a formula based on average prices in Jakarta, Rotterdam and Kuala Lumpur. Crude shipments attract no tax if the average is $750 or less.
“Over the past month, rainfall has been well below normal across southern Sumatra and most of Kalimantan,” Kyle Tapley, meteorologist at MDA Weather Services, said in an e-mail on Oct. 17. “Rains are expected to increase across Kalimantan over the next couple of weeks. Drier than normal weather should continue in southern Sumatra, however, which will maintain significant dryness and stress on palm growth.”
Forest fires in Sumatra also disrupted field work in the main producing areas last month, said Sahat Sinaga, executive director of the Indonesian Vegetable Oil Industry Association. Haze from the fires delayed flights to and from Sumatra as pollution neared levels considered dangerous to health. There were 153 hot spots in Sumatra, Sutopo Purwo Nugroho, spokesman for the national disaster mitigation agency, said Oct. 12.
Sept. 2014 (Survey) Aug. 2014 Sept. 2013
Output 2.30 2.55 2.40
Stockpiles 2.20 2.50 2.23
Exports 1.70 1.72 1.64
NOTE: Figures are in millions of tons
Inventories dropped 12 percent from August to 2.2 million metric tons, according to the median of six estimates from planters, traders, analysts and refiners compiled by Bloomberg. Production fell 9.8 percent to 2.3 million tons, the biggest decline this year, the median of five estimates shows.
Futures plunged 20 percent this year on swelling global supplies of cooking oils, including a record U.S. soybean harvest. That spurred Indonesia and Malaysia, which is the second-largest producer, to waive export duties. Dry conditions last month will worsen the impact on yields from a drought in the first quarter, according to PT Mandiri Sekuritas.
“The effect from the drought at the start of the year has begun to materialize,” said Hariyanto Wijaya, a Jakarta-based analyst at Mandiri Sekuritas. “The first-quarter dryness, coupled with very dry conditions in September, have really hurt output. Production may have peaked,” he said by phone Oct. 17.
Futures rose 0.4 percent to 2,139 ringgit ($656) a ton on Bursa Malaysia Derivatives today, after touching 1,914 ringgit on Sept. 2, the lowest since 2009. Shipments fell to 1.696 million tons in September from 1.72 million tons a month earlier, the Indonesian Palm Oil Association, known as Gapki, said in a statement today. That compares with the median estimate of 1.7 million tons in the survey.
Zero Tax
Shipments declined as some exporters deferred sales to October to benefit from the zero tax rate, said Joelianto, trading director at PT Sinar Mas Agro Resources & Technology. Exports to India, the top buyer, fell 38 percent to 305,330 tons and shipments to China, the second-biggest importer, dropped 31 percent to 56,260 tons, Gapki said in the statement.
Malaysia scrapped the export tax for two months in September and will extend the waiver until December, Prime Minister Najib Razak said Oct. 10. Reserves in the country expanded last month to the highest since March 2013 even as production dropped, palm oil board data show.
Indonesia cut the levy from 9 percent in September. The country sets the monthly export tariff according to a formula based on average prices in Jakarta, Rotterdam and Kuala Lumpur. Crude shipments attract no tax if the average is $750 or less.
“Over the past month, rainfall has been well below normal across southern Sumatra and most of Kalimantan,” Kyle Tapley, meteorologist at MDA Weather Services, said in an e-mail on Oct. 17. “Rains are expected to increase across Kalimantan over the next couple of weeks. Drier than normal weather should continue in southern Sumatra, however, which will maintain significant dryness and stress on palm growth.”
Forest fires in Sumatra also disrupted field work in the main producing areas last month, said Sahat Sinaga, executive director of the Indonesian Vegetable Oil Industry Association. Haze from the fires delayed flights to and from Sumatra as pollution neared levels considered dangerous to health. There were 153 hot spots in Sumatra, Sutopo Purwo Nugroho, spokesman for the national disaster mitigation agency, said Oct. 12.
Sept. 2014 (Survey) Aug. 2014 Sept. 2013
Output 2.30 2.55 2.40
Stockpiles 2.20 2.50 2.23
Exports 1.70 1.72 1.64
NOTE: Figures are in millions of tons