Malaysian palm oil stocks in September jumped 11.5 per cent to 1,578,255 tonnes from a revised 1,415,853 tonnes in August, industry regulator Malaysian Palm Oil Board said today.
September’s rise beat market expectations for a 7.4 per cent increase to 1,520,000 tonnes in a Reuters poll issued last week.
Traders said the stock levels may come under pressure this month after a cargo surveyor over the weekend reported an 8.27 per cent jump in October 1-10 exports, signalling a recovery in demand that may support prices.
Before the MPOB release, Malaysian palm oil closed up 2.1 per cent at midday as traders took positions on cargo surveyor’s bullish estimate for October’s first ten days of exports, having priced in the rise in September’s stocks.
“No matter what happens, palm oil stocks are going to maintain September’s levels for this month and next because production will keep the same pace and exports will start rising,” said a trader with a local commodities brokerage.
MPOB said September exports were down 0.4 per cent at 1.31 million tonnes compared to production levels of 1.56 million tonnes.
Output growth rose 4.1 per cent due to a seasonal rise in yields that normally starts from September till November, at the latest, and a favourable mix of hot weather and rains.
“Production could have been better but the Indonesian estate workers were on holiday for Ramadan and Eid al-Fitr for much of September,” said a plantation official referring to the Muslim month of fasting that ended in September with a major festival.
“El Nino, I suspect, is still an issue for yields,” the official said.
Yields were weak at in the second and third quarters of this year as oil palms went through biological tree stress after record harvests in 2008 and drier weather driven by El Nino worsened the condition.
El Nino’s hotter weather also limits the development of oil-producing female palm flowers and its full impact will be felt at the start of next year since it takes 6-7 months for the flowers to mature, estate owners say. Source : Business Times
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