Palm Reserves in Malaysia Jumping for Second Month on Output

Palm reserves in Malaysia jumping for second month on output

Palm oil stockpiles advanced for a second month – File pic

Palm oil stockpiles in Malaysia, the world’s second-biggest supplier, probably advanced for a second month as output climbed to the highest level since December.

Inventories increased 3 percent to 1.74 million metric tons in April from a month earlier, according to the median of six estimates from plantation companies, analysts and traders compiled by Bloomberg.

Production climbed 3.3 percent to 1.55 million tons, while exports rose 4 percent to 1.29 million tons, the survey showed. The Malaysian Palm Oil Board will release the official data on May 12.

Expanding stockpiles may pressure prices in Kuala Lumpur, which tumbled 12 percent since reaching an 18-month high in March. Futures usually weaken toward the middle of the year in anticipation of bigger output in the second half, Maybank Kim Eng Securities said in a report yesterday.

“Exports are expected to be slightly better in May because of Ramadan demand,” said Chandran Sinnasamy, head of trading at LT International Futures Sdn. in Kuala Lumpur. “But looking at the supply, it doesn’t seem like the stockpiles will fall much and will bottom out at 1.6 million tons in May.”

Futures rose 0.3 percent to 2,576 ringgit ($793) a ton on the Bursa Malaysia Derivatives by 10:57 a.m. in Kuala Lumpur, the first increase in six days. Prices jumped to 2,916 ringgit on March 11, highest level since September 2012. Exports rose 1.3 percent to 1.22 million tons in April, according to Intertek, a cargo surveyor.

“June could see a revival in prices on the back of better demand and plantations workers going on leave” for Ramadan, which could affect output, said Gnanasekar Thiagarajan, head of trading and hedging strategies at Kaleesuwari Intercontinental Singapore Pte. Communal meals typically boost demand during the Muslim fasting month of Ramadan, which starts in June this year and concludes with the Eid festival.

Global palm oil imports will climb to about 10.5 million tons in the April-to-June quarter from 9.6 million tons in the first quarter, Hamburg-based researcher Oil World said April 29. Importers will need to replenish stockpiles of vegetable oils made from soybeans, sunflower and palm in the next six months, it said.


Source : Astro Awani
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