Malaysia’s palm oil stocks in November probably rose 2.8 per cent to hit one-year highs of 2.03 million tonnes as output was still higher than exports despite falling at a faster pace, a Reuters poll showed on Monday.
Stocks in the world’s No. 2 producer of the vegetable oil have grown since May and have now reached their highest since November last year, a survey of five plantation houses showed.
The stocks level in November covers two-thirds of Malaysia’s total storage and refining capacity — a scenario planters and traders say will not create a sell-off in the market.
The poll, prepared ahead of official data next week, showed output falling 14.4 per cent to 1.70 million tonnes on heavy rains hitting yields in top oil palm growing states, such as Sabah on Borneo island.
“Stocks are growing slowly because production is higher compared to exports, but that’s not the real scenario,” said one poll respondent.
“Production is falling from the record levels in October because it has been hard to transport palm oil out of the estates to the refineries due to the heavy rains and floods. Water content has been rising.”
Plantation officials say they have started offering crude palm oil at a discount as the moisture content has gone up to 0.40 per cent from the usual 0.25 per cent specification. Discounts range from RM200-RM300 a tonne of crude palm oil that now retails at RM2,450.
November’s exports inched lower to 1.45 million tonnes, in what poll respondents say is fairly resilient demand from China and India in a longer-than-expected restocking exercise after festivals in August through October.
“Asian buyers are buying consistently even in the low demand season because palm oil’s discount to soyoil has widened to US$170-US$190 a tonne from the usual US$100,” said a plantation official. “European demand has dipped slightly.”
In November, Malaysia imported 50,000 tonnes of mainly crude palm oil from Indonesia. Traders say more could have been imported had it not been for the delays at the ports.
Malaysian planters with estates in Indonesia prefer to transfer their stocks to Malaysia because of a lack of storage capacity in Indonesia and prospects of better prices in Malaysia. – Reuters Source: Business Times
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