Palm oil stocks climb in August

KUALA LUMPUR: Malaysian palm oil stockpiles climbed again in August, but did not to breach the two-million tonne mark due to stronger-than-expected exports of the commodity, used to churn out products ranging from chocolate to shampoo.
Inventories of the tropical oil rose 8.79% from July to 1.94 million tonnes, data from industry regulator the Malaysian Palm Oil Board (MPOB) showed today, the highest level since February 2016.
Growing stocks in the world’s No.2 palm producer, could dampen benchmark prices for the oil, which gained 2% last week. They stood at around RM2,780 a tonne today.
“Although we are slightly positive that stock levels are lower than expected, they are still climbing,” said Ivy Ng, an industry analyst at CIMB Research.
The data showed that August exports had risen 6.43% from July to 1.49 million tonnes, beating analyst expectations of 1.42 million tonnes.
“Exports have done better than estimated, which is why stocks were below the expected two- million-tonne level,” Ng said.
Demand for palm oil is expected to be well supported in September ahead of major festivals in top consumers India and China the following month.
“We are optimistic on demand due to the Diwali and Mid-Autumn festivals in October. We should see improvements in September exports ahead of (those celebrations),” Ng added.
The gains in stockpiles came despite production declining 0.9% from July to 1.81 million tonnes.
Palm oil output in Malaysia is seen recovering in the second half of this year as the crop damaging effects of an El Nino weather pattern fade.
Output is set to recover this quarter, but analysts and planters say trees are still seeing some lingering impact from the 2015 El Nino.
A Thomson Reuters survey had pegged inventory levels rising 6.5% to 1.9 million tonnes in August. Production was seen down 1.5% percent at 1.8 million tonnes. – Reuters