Published July 9, 2009

M'sian palm oil stock up 4.6% in June: poll

	Email this article
	Print article
	Feedback

(KUALA LUMPUR) Malaysia's June palm oil stocks have risen 4.6 per cent to a four-month high as production comfortably outpaced shipments of the vegetable oil which appear to have stalled, a Reuters poll showed yesterday.

Inventories in the world's No 2 palm oil producer after Indonesia rose to 1.43 million tonnes, the highest since February and the second consecutive monthly build-up that is now above the minimum 1.4 million tonnes needed for the processing industry.

Output probably rose 6.1 per cent to 1.48 million tonnes as a good mix of hot and wet weather a year ago has encouraged more oil-rich female palm flowers to bloom, a poll of five plantation houses showed.

'The current weather mix has also been very beneficial with dry weather in the morning that makes harvesting easier and rains in the afternoon to encourage better yields some months down the line,' said one poll respondent.

Oil palms have also recovered from a bout of biological tree stress that settled in after record harvests last year, although some planters fear that a brewing El Nino episode could prevent a full recovery.

'There is El Nino to think about, but that will be a factor later on. The weather issue should have spiked up prices now but the gloomy economic outlook is spoiling things,' he said.

Palm oil markets yesterday shrugged off a report by Australia's Bureau of Meteorology, which noted the development of El Nino was increasing and could lead to a medium-strength event, instead focusing on fears of weaker global demand.

El Nino brings hotter weather that can sap palm oil yields 12-18 months later but it also may impede India's developing June-Sept monsoon, which traders say could hamper oilseed crop production and lead to more imports of palm oil.

'Demand from India is hard to predict. Stocks at ports are high but the monsoon is shakey and the festival months are starting with Ramadan in August,' said another poll contributor, referring to the Muslim holy month where fasting in the day is followed by elaborate feasts.

So far, signs of China, India and Pakistan stocking for a slew of festivals that will end in October were few in June, with exports seen up 0.8 per cent at 1.23 million tonnes.

Cargo surveyor Societe Generale de Surveillance showed that China in June bought 16.1 per cent more palm cargoes from Malaysia at 349,352 tonnes while India and Pakistan saw a marked decline. -- Reuters