Malaysia end-July palm oil stocks slip to one year low – MPOB
Malaysian palm oil end-stocks fell unexpectedly in July, slipping to a one-year low, as exports outpaced forecasts and imports fell sharply from the previous month, industry regulator data showed on Tuesday.
The dip in stockpiles could further support benchmark palm oil prices, which have been trading at three-month highs, tracking gains in related edible oils and also bolstered by a weaker ringgit.
Malaysian palm oil futures were last up 0.6% at 2,191 ringgit ($522.79) a tonne at the midday break on Tuesday, just below an earlier peak of 2,199 ringgit, the highest since April 22.
Inventory levels fell for a fifth consecutive month to sit at a one-year low as of end-July at 2.39 million tonnes, down 0.8% from June, data from the Malaysian Palm Oil Board (MPOB) showed.
Malaysia’s palm oil exports rose 7.4% in July from the previous month to 1.49 million tonnes, while imports tumbled from 101,250 tonnes in June to just 36,664 tonnes.
“Stockpiles are coming down due to lesser imports from Indonesia … The discount to Malaysian palm oil is narrowing, making it uneconomical to import to Malaysia,” said a Singapore based trader.
The decline in stocks came even as production rose 15.1% in July to 1.74 million tonnes, the highest monthly output this year. It was also the biggest month-on-month rise since March 2018.
“The pattern of increasing output in the first six months of the year was already pointing to higher levels. Good rains from last year is leading to better production,” said the Singapore based trader.
“Full year production might cross 21 million tonnes now. Stocks will continue to be above 2.2 million tonnes and pick up as we get into the final quarter of the year, which is also the peak production months for Indonesia.”
Malaysia produced 9.79 million tonnes in the first half, according to MPOB data, up from 8.9 million tonnes a year ago.
A Reuters poll at the start of the year pegged Malaysia’s 2019 production at 20 million tonnes.
Oil palm trees usually produce more in the third and fourth quarters of the year, with output peaking between August and October in recent years.
A Reuters survey had forecast palm oil stockpiles at the end of July to rise 1.8% to 2.47 million tonnes. Production was seen gaining 11.4% to 1.69 million tonnes, while exports were also seen up by 3.8% to 1.44 million tonnes.
Source: Reuters (Reporting by Emily Chow; Editing by Christian Schmollinger and Richard Pullin)