Palm Stockpiles in Malaysia Seen at 14-Month Low on Exports

(Bloomberg) -- Palm oil inventories in Malaysia likely slumped to a 14-month low in August as exports from the world’s second-largest grower jumped.

Stockpiles fell about 7% from a month earlier to 2.22 million metric tons, the biggest decline in three months and the lowest since June 2018, according to the median of 12 estimates in a Bloomberg survey of analysts, traders and plantation executives.

Exports advanced about 14% to 1.70 million tons, according to the survey, the biggest monthly increase since March. Crude palm oil production was flat at 1.74 million tons. The Malaysian Palm Oil Board will release official data on Sept. 10.

Palm Stockpiles in Malaysia Seen at 14-Month Low on Exports
  • Strong demand from India and China over the past few weeks, lower production and steady domestic consumption are expected to have squeezed Malaysia’s palm oil stockpiles by the end of August, according to Nagaraj Meda, managing director of Hyderabad-based TransGraph Consulting Pvt.
    • Inventories are likely to stay below 2018 levels during the rest of this year and keep sentiment bullish, he said. The market is expected to see a correction in October as festive buying by China and India may be over by then, he added.
  • Focus will also be on the hike in India’s import duty on refined palm oil from Malaysia. The top buyer raised the tax to 50% from 45%, making the duty on par with those for Indonesia.
  • Palm oil prices may average 2,200 ringgit ($523) per ton in the July-September period as well as in the fourth quarter, before rising to 2,300 ringgit in the first quarter of 2020, according to Rabobank International.
    • The prediction is based on the assumption that Indonesia will increase its biodiesel mandate to B30 in January and China will boost purchases due to a reduction in soybean oil availability.
  • Stockpile estimates in the survey ranged from 2.11 million tons to 2.42 million tons
    • Output forecasts varied from 1.66 million tons to 1.83 million tons, with 6 respondents forecasting a monthly increase.
    • Estimates for exports were between 1.57 million and 1.72 million tons.
  • Malaysian imports are forecast to rise to 60,000 tons in August from 36,664 tons in July. Estimates for domestic consumption ranged from 200,000 tons to 310,000 tons.
August 2019 (Survey)July 2019 (MPOB)August 2018 (MPOB)
Production1.741.741.62
Stockpiles2.222.392.50
Exports1.701.491.10
Imports0.060.040.08

NOTE: August figures, in million metric tons, are based on the median of 12 estimates.

©2019 Bloomberg L.P.

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