Palm Futures Up Despite Fall in Output Growth

PALM oil futures gained for a fourth day on signs the slower-than-expected recovery of oil palms from tree stress will hurt production growth. Production in Malaysia gained 3 per cent to 1.49 million metric tons in July, the slowest pace in three months, Malaysian Palm Oil Board data showed Aug 10. With exports expanding 13 per cent, inventories dropped 5.7 per cent to 1.33 million tons, the first decline in three months, the data showed. Oil palms in Sabah, east Malaysia, are showing signs of stress, analysts say. “Yields have yet to recover following heavy rains in Sabah in the last two quarters,” a HwangDBS Vickers Research report said today, citing conditions at IOI Corp, Malaysia’s second- largest grower. “With rains washing away pollen, new flowers would still need about six months to bear fruit. Assuming similar conditions in most of Sabah, yield recovery could be slower than normal.” October-delivery palm oil gained as much as 1 per cent to RM2,490 (US$706) a ton on the Malaysia Derivatives Exchange and was last at RM2,470 a ton at the 12:30 p.m. trading pause in Kuala Lumpur. Futures advanced 6.9 per cent last week, the largest weekly gain since the five-day period ended April 3. Malaysian Industries and Commodities Minister Bernard Dompok forecast on July 17 that full-year production would exceed last year’s record of 17.7 million tons. The government in April forecast 18.3 million tons production for the year. – Bloomberg

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