Industry players and analysts had anticipated that the CPO export tax would resume in March given the recovery in the locally delivered CPO prices currently hovering at RM2,290-RM2,300 per tonne.
KUALA LUMPUR: Malaysia's stockpile of palm oil for November is expected to have grown at its sharpest monthly pace in five months, with a slump in exports outpacing a drop in production.
Growing inventories could peg back benchmark prices of the tropical oil, which have risen 13% since the start of November in the slipstream of stronger rival oils and a weaker ringgit.
Palm was up 0.9% at RM3,104 per tonne at the midday break on Monday.
Stockpiles in November rose 7.4% to 1.69 million tonnes from the previous month, based on a Reuters survey of eight planters, traders and analysts. That monthly gain in stocks would be the sharpest since June, though still at the lowest November levels in six years.
Slower exports are seen contributing to the inventory build-up.
November exports are estimated to have declined 9.8% from October to 1.29 million tonnes, led by a slump in demand from India. The world's top consumer of edible oils - and the largest importer of palm - removed its high-value rupee notes from circulation in early November, disrupting trade in a cash-reliant economy.
?"India's demonetisation has affected palm demand in the short term. We expect things to normalise in three months," said Alan Lim, a plantations analyst at MIDF Research in Kuala Lumpur. "?We also expect China's demand to pick up in the second half of December due to stocking activity ahead of Chinese New Year."
"If China releases rapeseed oil stocks, it won't be as much as the previous round, reducing the impact on palm," Lim said.
Weaker palm production in November could slow down the build-up in stockpiles.
Output likely fell 2.8% in November to 1.63 million tonnes, the lowest monthly figure since July, making for a second straight month of declines as fresh fruit yields are still being impacted by the lingering effects of last year's El Nino. The weather event brings dry conditions across South-East Asia, lowering palm oil output in top growers Indonesia and Malaysia.
Recent rains, however, are seen reducing the El Nino effects by softening yield declines.
"?Palm trees are still suffering from the impact of last year's strong El Nino, yield is still much below potential," said Phang Loy Fatt, an official with the marketing division of Kuala Lumpur Kepong Bhd
.
?In the past month, rains have come to many parts of the nation, particularly heavy in Sabah and the northern states of Peninsular Malaysia. That aided some extent of yield recovery.
Otherwise, November production would be at least double-digits down," he said. "?We should see a meaningful yield recovery from the second quarter of next year."
The median figures from the Reuters survey imply Malaysian consumption of 348,731 tonnes in November. Official data will be released on Dec 13 by the Malaysian Palm Oil Board. - Reuters
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