Malaysia’s palm oil stocks inch up 0.68% in July
Palm oil stock levels in Malaysia at the end of July rose for a third straight month to 1.73 million tonnes, but were only marginally (0.68%) higher from June, data from the Malaysia Palm Oil Board (MPOB) showed Thursday, August 10.
The increment was smaller than the change seen from May to June and came as a stronger export performance eroded the healthy increase in production.
The change in end-month stocks also came in much lower than earlier industry expectations of around 4%.
Malaysian palm oil exports in July rose by 15.6% from June to 1.35 million tonnes – the second highest level seen this year – aided by strong buying from markets such as India and as palm oil has kept its competitiveness against rival soft oils after trading at a premium to its competitors earlier this year.
That has made it a preferred option for buyers.
The level also surpassed export estimates from cargo surveyors which had put July shipments at 1.17-1.24 million tonnes, while industry estimates from newswire polls had pegged exports at around 1.27-1.28 million tonnes.
Crude palm oil (CPO) production in Malaysia in July also rose by 11.2% from June to 1.61 million tonnes, also exceeding estimates of 1.56-1.58 million tonnes and figures from the Malaysian Palm Oil Association, which had production at 10.73% higher to around 1.6 million tonnes.
Lower imports also added to the lower end-month stock figure, with imports falling by 23.2% to 103,837 tonnes, while local disappearance was estimated at 8.23% lower to 348,826 tonnes.
For August, Malaysia’s production is likely to be steady to firmer as the country enters its peak production season, though concerns over tree health and labour productivity linger, while the change in exports may be more moderate with buyers holding higher stocks following strong buying in the last two months.
The benchmark CPO futures contract for October delivery on the Bursa Malaysia Derivatives Exchange fell 51 points to close at MYR3,720 per tonne ($813 per tonne) at the end of the early trading session, with market participants taking positions ahead of MPOB’s data release on earlier expectations of higher stocks and as CPO tracked weakness from rival soy oil futures on CME from overnight.
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