KUALA LUMPUR: Malaysian palm oil stockpiles climbed again in August, but did not to breach the 2 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 percent from July to 1.94 million tonnes, data from industry regulator the Malaysian Palm Oil Board (MPOB) showed on Monday, 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 percent last week. They stood at around 2,780 ringgit ($662.14) a tonne on Monday. “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 percent 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 2 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 percent 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 percent to 1.9 million tonnes in August. Production was seen down 1.5 percent at 1.8 million tonnes. The following is a breakdown of Malaysian Palm Oil Board figures and Reuters estimates for August: (volumes in tonnes) August 2017 August 2017 poll August 2016 July 2017 Output 1,810,594 1,800,000 1,701,833 1,827,108 Stocks 1,942,001 1,900,000 1,464,081 1,784,143 Exports 1,487,820 1,420,000 1,824,437 1,397,846 Imports 41,661 40,350 7,807 52,962 *denotes revised figures ($1 = 4.1985 ringgit)
