PREVIEW-Malaysian palm oil stocks seen at 6-mth high in Sept

Mon Oct 7, 2013 2:19am EDT

* Sept stocks seen rising to 1.91 mln T from 1.67 mln T in
Aug
    * Output seen at 2.0 mln T vs 1.74 mln T in Aug
    * Exports seen at 1.55 mln T vs 1.52 mln T in Aug
    * Malaysian Palm Oil Board data due Oct. 10, after 0430 GMT

    By Anuradha Raghu
    KUALA LUMPUR, Oct 7 (Reuters) - Malaysian palm oil stocks
may have jumped to their highest in six months in September as
strong seasonal output outweighed robust export demand, a
Reuters survey showed, pressuring prices that have already lost
about 5 percent this year.
    Inventory in the world's No.2 palm oil producer likely
climbed to 1.91 million tonnes, the highest since April and up
14.8 percent from 1.67 million tonnes in August. 
    The survey of five planters and traders showed that
production in September may have surged 15 percent from August
to 2.0 million tonnes, with palm oil trees typically producing
more fruit in the second half of the year and with August output
curbed due to a major Muslim holiday. 
    "Production was up 25 percent in the first 20 days of
September. I anticipate a big jump and thereby a fairly big
stockbuild that will continue right up to December," an official
at a plantation firm said in the survey.
    "I think September, October and November will be very
high-producing months. Eventually we'll have 2.3-2.4 million
tonnes of stocks," the official added.
     Exports of Malaysian palm oil likely grew 1.7 percent from
a month ago to 1.55 million tonnes of shipments, according to
the survey. 
  
    LOCAL CONSUMPTION
    The median of figures provided by respondents implied
domestic consumption in September of around 230,000 tonnes.
Consumption generally ranges from 150,000 to 180,000 tonnes.
    Malaysian imports of crude palm oil from top producer
Indonesia most likely rose to 30,000 tonnes in September from
6,950 tonnes in August. 
    
    FACTORS TO WATCH    
    Forecasts of surging Southeast Asian output alongside rising
supply of competing global oilseeds dragged Bursa Malaysia
Derivatives Exchange's palm oil benchmark futures down
3.5 percent in September. 
    Leading vegetable oil analysts have warned that palm oil
prices are poised to fall deeper to four-year lows of 2,000
ringgit by early January if Brent crude drops below $100
per barrel and if a bumper soy crop in South America surfaces as
expected. Brent futures edged down towards $109 a barrel on
Monday.  
    Larger amounts of soybeans for crushing into rival soyoil
could snatch demand away from palm oil, while cheaper crude oil
would lure buyers away from using palm as a substitute for
biofuels. 
    Some traders and planters say Malaysian palm oil production
could hit a new record of 19.2 million tonnes this year compared
to 18.79 million tonnes in 2012. Indonesia, the world's top
producer, expects about 26.7 million tonnes this year.
 
    The strength of the Malaysian ringgit could also
continue to weigh on palm as it makes the ringgit-priced
feedstock more expensive for overseas buyers and refiners. 
    The U.S. government shutdown triggered a rally of most
emerging Asian currencies, including the ringgit which climbed
as much as 1.1 percent when the news first broke.   
    But palm may get some respite from festive demand which
drives up consumption of the tropical oil commonly used as an
ingredient in food such as biscuits and chocolate.
    Buyers from India, the world's biggest palm oil consumer,
usually re-stock ahead of Muslim and Hindu religious festivals
in November.
    Indonesia will keep its export tax for crude palm oil at 9
percent for October, while Malaysia has decided to keep a more
competitive export duty of 4.5 percent that has been in place
since March.                    
         
    Breakdown of September estimates (in tonnes):               
  
                        Range                 Median*           
  
  Production      1,840,000 - 2,130,000     1,995,586           
  Exports         1,500,000 - 1,607,301     1,550,000           
 
  Imports            10,000 - 50,000           30,000         
  Closing stocks  1,670,000 - 1,950,000     1,912,000       
 
  * Official stocks of 1,665,592 tonnes for August, plus the
above estimated output and imports give a total September supply
of 3,691,178 tonnes. Based on the median of the export and
closing stock estimates, Malaysia's domestic consumption in
September would be 229,178 tonnes.

 (Editing by Joseph Radford)
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