MARKET DEVELOPMENT
High Palm Oil Inventory Is Seasonal, Says MPOC
High Palm Oil Inventory Is Seasonal, Says MPOC
21/12/2015 (Bernama) - The high inventory for palm oil in Malaysia is seasonal, says Malaysian Palm Oil Council (MPOC) Chief Executive Officer, Tan Sri Datuk Dr Yusof Basiron.
The Malaysian Palm Oil Board (MPOB) recently released Malaysian palm oil data for November 2015, which saw palm oil stocks increase by 2.57 per cent to 2.91 million tonnes against the 2.84 million tonnes registered in the preceding month.
"We have always dealt with high inventories in the months of October and November because the peak production months would be September and October," he told Bernama on the sidelines of the Malaysia-Egypt Palm Oil Trade Fair and Seminar (POTS) here recently.
Yusof said the inventories would eventually build up but would be depleted in January, February and March when normal trade flow by importing countries resumes.
On market talk regarding weaker exports to China and India, Yusof said there has been no real decline in demand because the populations of both countries have continued to grow, as indicated by the MPOC data.
MPOB's data also revealed that exports of biodiesel for the month eased by 99.28 per cent to 82 tonnes from the 11,334 tonnes in October while exports of palm oil declined 12.43 per cent to 1.50 million tonnes against 1.71 million tonnes previously.
"Exports are based on potential population growth and this cycle of slackening or increase in demand on a month-to-month basis is a normal phenomenon in the market.
"It is something that the industry has come to manage well with their management strategies, ensuring that our palm oil stocks are normalised over the course and the price find its own level, as well as having other forms of stock management the government has put in place," Yusof said.
He said the combined efforts by MPOC, MPOB and the ministries involved to rationalise supply and demand were to ensure palm oil producers were well renumerated over the course of a year and not on a month-to-month basis.
"We will be targeting to obtain fair prices for our commodities and fair prices for the buyers of our commodities.
"There is no question of declining demand (from China and India) unless there is something wrong with population growth, but that is not the case," he said, pointing out that any decline in demand is only a temporary fluctuation.
"Data shows the population continued to grow and demand for foods, oils and fats will also continue to grow," he said.
On the outlook for 2016, he said the palm oil price would tend to range above RM2,500 a tonne, adding 2016 will be a year of contrasts.
"The low petroleum price may stay for some time, and that will impact (Malaysian) biodiesel demand, because it may not be able to compete or sell well amid low diesel prices.
"On the other hand, El Nino will be affecting supply and production: with reduced supply, the price would tend to firm or go up," he said.
With more palm oil and oils and fats being produced over the last couple of years, less palm oil would be available in the market, he said.
"And that would strengthen the price irrespective of the petroleum price because biodiesel demand would no longer be a factor.
"It is the shortage of supply that will rule the market coming into 2016," he added.
The Malaysian Palm Oil Board (MPOB) recently released Malaysian palm oil data for November 2015, which saw palm oil stocks increase by 2.57 per cent to 2.91 million tonnes against the 2.84 million tonnes registered in the preceding month.
"We have always dealt with high inventories in the months of October and November because the peak production months would be September and October," he told Bernama on the sidelines of the Malaysia-Egypt Palm Oil Trade Fair and Seminar (POTS) here recently.
Yusof said the inventories would eventually build up but would be depleted in January, February and March when normal trade flow by importing countries resumes.
On market talk regarding weaker exports to China and India, Yusof said there has been no real decline in demand because the populations of both countries have continued to grow, as indicated by the MPOC data.
MPOB's data also revealed that exports of biodiesel for the month eased by 99.28 per cent to 82 tonnes from the 11,334 tonnes in October while exports of palm oil declined 12.43 per cent to 1.50 million tonnes against 1.71 million tonnes previously.
"Exports are based on potential population growth and this cycle of slackening or increase in demand on a month-to-month basis is a normal phenomenon in the market.
"It is something that the industry has come to manage well with their management strategies, ensuring that our palm oil stocks are normalised over the course and the price find its own level, as well as having other forms of stock management the government has put in place," Yusof said.
He said the combined efforts by MPOC, MPOB and the ministries involved to rationalise supply and demand were to ensure palm oil producers were well renumerated over the course of a year and not on a month-to-month basis.
"We will be targeting to obtain fair prices for our commodities and fair prices for the buyers of our commodities.
"There is no question of declining demand (from China and India) unless there is something wrong with population growth, but that is not the case," he said, pointing out that any decline in demand is only a temporary fluctuation.
"Data shows the population continued to grow and demand for foods, oils and fats will also continue to grow," he said.
On the outlook for 2016, he said the palm oil price would tend to range above RM2,500 a tonne, adding 2016 will be a year of contrasts.
"The low petroleum price may stay for some time, and that will impact (Malaysian) biodiesel demand, because it may not be able to compete or sell well amid low diesel prices.
"On the other hand, El Nino will be affecting supply and production: with reduced supply, the price would tend to firm or go up," he said.
With more palm oil and oils and fats being produced over the last couple of years, less palm oil would be available in the market, he said.
"And that would strengthen the price irrespective of the petroleum price because biodiesel demand would no longer be a factor.
"It is the shortage of supply that will rule the market coming into 2016," he added.