PREVIEW-Malaysia July palm oil stocks seen at lowest in over 2 years

Fri Aug 2, 2013 1:48am EDT

* WHAT: Malaysia's July palm oil stocks, output and exports
data
    * WHEN: Aug 14, after 0430 GMT

    By Chew Yee Kiat
    SINGAPORE, Aug 2 (Reuters) - Malaysia's end-July palm oil
stocks likely eased to their lowest in more than two years as
demand for the tropical oil continued to outstrip production, a
Reuters survey of five plantation companies showed on Friday.
    Inventory levels may have dropped 3 percent to 1.6 million
tonnes in July, from 1.65 million tonnes the previous month,
according to the survey. 
    The projected seventh straight monthly decline would reduce
the stocks to the lowest level since February 2011.    
    Output in the world's second largest palm oil producer,
meanwhile, likely rose 10 percent from a month ago to 1.56
million tonnes in July, the biggest jump so far this year.
    The increase in yield likely signalled the start of the
typically higher production cycle seen July to December.
    But output still probably fell short of the estimated 1.65
million tonnes of total demand represented by exports and local
consumption, the companies surveyed said.
    Exports probably rose 3 percent to 1.45 million tonnes in
July, the survey showed.
    
    LOCAL CONSUMPTION
    The median of the figures provided by the poll respondents
imply domestic consumption in July of around 192,106 tonnes. 
    Malaysia's imports of crude palm oil from top producer
Indonesia most likely gained to 40,000 tonnes in July from 5,860
tonnes the previous month, according to the survey.    
    
    FACTORS TO WATCH    
    The Bursa Malaysia Derivatives Exchange's palm oil benchmark
futures plunged to the lowest since October 2009 in
July amid projections for a bumper soy crop. 
    A better soy harvest could raise soybean oil supply and
shift demand away from palm oil. 
    Palm demand remains resilient for now, with India's refined
palm oil imports set to surge 69 percent to a record in the year
ending October, a key industry official has said, as consumption
picks up pace ahead of the festival season starting in August.
 
    A weaker ringgit may also bolster demand, traders said, as
the ringgit-priced feedstock becomes cheaper for overseas
buyers. The currency hit three-year lows this week after ratings
agency Fitch downgraded Malaysia's credit. 
    Indonesia, the top palm oil producer, kept its crude palm
oil export tax unchanged at 10.5 percent for August. Malaysia
also left its export tariff unchanged for the sixth straight
month at 4.5 percent.  
                     
    Breakdown of July estimates (in tonnes):                  
                        Range                 Median*           
  
  Production      1,472,375 - 1,560,000     1,557,000           
  Exports         1,410,000 - 1,490,000     1,454,159           
 
  Imports            35,000 -  50,000          40,000         
  Closing stocks  1,524,000 - 1,646,531     1,597,266       
 
  * Official stocks of 1,646,531 tonnes for June, plus the above
estimated output and imports give a total July supply of
3,242,531 tonnes. Based on the median of the export and closing
stock estimates, Malaysia's domestic consumption in July would
be 192,106 tonnes.

 (Editing by Tom Hogue)