PREVIEW-Malaysia August palm oil stocks likely climbed to 3-mth high

Thu Sep 5, 2013 3:53am EDT

* August stocks seen rising to 1.73 mln T vs 1.66 mln T in
July
    * Output seen at 1.76 mln T vs 1.67 mln T in July
    * Exports seen at 1.53 mln T vs 1.42 mln T in July
    * Malaysian Palm Oil Board data due Sept. 10, after 0430 GMT

    By Anuradha Raghu
    KUALA LUMPUR, Sept 5 (Reuters) - Malaysia's August palm oil
stocks likely grew to their largest level in three months as
output outweighed exports, a Reuters survey showed, although
healthy demand for the tropical oil kept stockpiles in check.
    Inventory levels in the world's No.2 producer may have rose
4 percent to 1.73 million tonnes, its highest level since May,
according to the median forecast of five plantation firms.
    The survey showed that production probably climbed 5 percent
from a month ago to 1.76 million tonnes. 
    Oil palm trees typically produce more fruit during the
higher yield season which starts in the second half of the year,
but a Muslim festival in July-August may have interrupted
harvesting as plantation workers took leave for the
celebrations.
    Exports of Malaysian palm oil likely stood at 1.53 million
tonnes in August, a 7.8 percent increase from a month ago.
Malaysia has enjoyed healthy demand from China as the world's
second-largest palm oil buyer stocked up ahead of its Mid-Autumn
festival in September.
    
    LOCAL CONSUMPTION
    The median of the figures provided by the poll respondents
imply domestic consumption in August of around 200,000 tonnes.
    Malaysia's imports of crude palm oil from top producer
Indonesia most likely rose to 42,000 tonnes in August from 8,151
tonnes in July.
    
    FACTORS TO WATCH    
    Forecasts of hot spells in the U.S. grain belt coupled with
a weak ringgit lifted the Bursa Malaysia Derivatives Exchange's
palm oil benchmark futures in August to its best
monthly performance since December 2010.
    Dry weather in the U.S. Midwest would crimp soy yields as
smaller amounts of soybeans for crushing into soybean oil would
channel demand to competing palm oil.
    The weak Malaysian ringgit also stoked the rally,
bolstering palm prices up 7.5 percent in August. A weak local
currency makes the ringgit-priced feedstock cheaper for overseas
buyers and refiners. 
    But the palm market faces steadily rising inventory levels
as trees seasonally produce more fresh fruit bunches ripe for
picking by plantation workers returning from their holiday. 
    "Most likely the market might not be able to move up that
much from this level, because in the coming months we are
looking at production as a threat," a trader with a foreign
commodities brokerage told Reuters. 
    Investors will also be scrutinizing the volatile situation
in the Middle East. On Thursday, the U.S. cleared its first
hurdle to win backing for a military strike against Syria,
prompting an increase in Brent crude prices. 
    Higher crude oil prices would shift demand to palm oil as a
cheaper alternative to produce biodiesel.    
    Indonesia, the world's top palm oil producer, cut its export
tax for crude palm oil to 9 percent for September, down from
10.5 percent in August. Malaysia, however, left its export
tariff at 4.5 percent, unchanged since March.
     
                     
    Breakdown of August estimates (in tonnes):                  
                        Range                 Median*           
  
  Production      1,675,000 - 1,760,000     1,758,000           
  Exports         1,500,000 - 1,550,000     1,530,000           
 
  Imports            40,000 - 50,000           42,000         
  Closing stocks  1,660,000 - 1,758,000     1,730,000       
 
  * Official stocks of 1,664,053 tonnes for July, plus the above
estimated output and imports give a total August supply of
3,464,053 tonnes. Based on the median of the export and closing
stock estimates, Malaysia's domestic consumption in August would
be 204,053 tonnes.

 (Editing by)
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