Malaysia's palm oil stocks peaked in October, in downward trend now

KUALA LUMPUR: Palm oil stockpiles peaked in October and began trending down from November, as palm production should have peaked by last month, said Hong Leong Investment Bank (HLIB Research). 

  It noted that exports, on the other hand, will likely be subdued in the near term as the winter season approaches and export demand for palm oil tends to weaken during the winter season.

  The statement further highlights that narrower palm oil and gas oil spreads, along with crude palm oil (CPO) discounts to soybeans, relatively high stockpiles in key importing countries, and the absence of major festive seasons, are likely to curb near-term demand for palm oil.

  The firm maintained CPO price assumptions of RM3,850 per tonne for this year and RM4,000 per tonne for 2024. 

  Palm oil inventories climbed for the sixth straight month, by 5.8 per cent month-on-month (MoM) to 2.45 million metric tonnes in October, boosted mainly by seasonally higher cropping patterns and lower domestic consumption. 

  The stockpile missed Bloomberg's survey estimate of 2.59 million metric tonnes, as exports surprised on the upside. 

  "Palm oil production remained on an uptrend, increasing by 5.9 per cent MoM to 1.94 million metric tonnes in October as a seasonally higher cropping pattern continued, with output contributions from Peninsular Malaysia and East Malaysia rising by 6.3 per cent and 5.4 per cent, respectively.

  Year-to-date (YTD), production increased marginally to 15.2 million metric tonnes as fresh fruit bunch (FFB) yield continued to trend up since July."

  Exports increased for the first time since July by 21 per cent to 1.47 million metric tonnes last month due to restocking activities from China.  

 The firm maintained "neutral" on the sector given the absence of a notable demand catalyst.

Most Popular
Related Article
Says Stories