Malaysia palm oil stocks seen edging down from seven month high

Malaysian palm oil futures fell to their lowest in nearly three years on Friday evening in a fourth session of losses, tracking declines in related edible oils.

KUALA LUMPUR: Malaysia’s palm oil stocks likely edged down in September from seven-month highs in August as shipments from the world’s No.2 exporter of the commodity outpaced production-growth for the month, according to a Reuters survey.

Easing stockpiles would support benchmark palm oil prices, which this week rose from three-month lows to stand at 2,231 ringgit ($538.24) during Friday’s midday break.

September inventories are expected to have dropped 0.7 percent from the month before to 2.47 million tonnes, according to the median estimate of eight planters, traders and analysts surveyed by Reuters.

The dip in stockpiles was largely attributed to a surge in exports, which were estimated to have jumped 50 percent from August to 1.65 million tonnes, potentially marking what would be the highest level in over two years and the sharpest monthly jump since October 2006.

That comes after cargo surveyors reported on Monday that Malaysia’s palm oil exports rose between 49 percent and 54.6 percent in September.

Respondents in the Reuters survey said exports were boosted after the country in September cut its crude palm oil export tax to zero from 4.5 percent in August, as well as being stoked by good seasonal demand from top importer India ahead of its Diwali celebration in early November. 

Malaysia is keeping the export tax at zero for October.

 “October’s exports will also be as good because market prices are likely to have bottomed out already. It will be time to stock up for key markets,” said a trader based in east Malaysia. 

Leading analysts at an industry conference last week said palm prices would trade around 2,100-2,200 ringgit for the rest of the year, before rising in 2019 as production tapers off in line with seasonal trends.

The survey pegged September’s output to rise 14.7 percent from August to 1.86 million tonnes. That would the strongest production since November and the highest September levels since 2015.

 “We’re expecting a late uptick in production this year,” said a Singapore based trader, adding that Malaysian output should peak in November.

Production typically rises in line with seasonal trends in the third and fourth quarters of the year, and has usually peaked between August and October in recent years.

Official palm oil data will be published by the Malaysian Palm Oil Board â?ªafter 0430 GMT on Oct. 10. 

The median figures from the Reuters survey put Malaysia’s consumption in September at 304,732 tonnes. - Reuters