S&P Global Offerings
Featured Topics
Featured Products
Events
S&P Global Offerings
Featured Topics
Featured Products
Events
S&P Global Offerings
Featured Topics
Featured Products
Events
Solutions
Capabilities
Delivery Platforms
News & Research
Our Methodology
Methodology & Participation
Reference Tools
Featured Events
S&P Global
S&P Global Offerings
S&P Global
Research & Insights
Solutions
Capabilities
Delivery Platforms
News & Research
Our Methodology
Methodology & Participation
Reference Tools
Featured Events
S&P Global
S&P Global Offerings
S&P Global
Research & Insights
S&P Global Offerings
Featured Topics
Featured Products
Events
Support
10 Nov 2021 | 06:08 UTC
Highlights
Palm oil stocks seen rising further in near term
November output forecast to dip marginally
Malaysia's palm oil stocks rose 4.4% month on month to 1.834 million mt at end October on better-than-expected production and a dip in exports, the Malaysian Palm Oil Board said in a monthly update Nov. 10.
Crude palm oil output by the world's second-largest producer and exporter rose 1.3% month on month to 1.726 million mt October, beating trade expectations of flat to lower production.
An S&P Global Platts survey of 13 analysts, traders and growers had pegged October production at 1.68 million mt and ending stocks at 1.803 million mt.
An extended labor crunch caused by border closures has slowed harvesting activity at Malaysian oil palm estates in the past year. Foreign workers account for about 70% of the country's plantation workforce.
"Production is in line with the October 2020 level but overall we are still 100,000 mt lower versus the pre-COVID-19 timeline [October 2019]," said Marcello Cultrera, institutional sales manager and derivatives dealer at Kuala Lumpur-based Phillip Futures. "Stocks are still 16.8% below the 10-year historical October average of 2.2 million mt," Cultrera added.
The MPOB in September lowered its 2021 palm oil production outlook to 18 million mt from its earlier forecast of exceeding 2020 production of 19.1 million mt.
"Despite the lower production and higher demand scenario, stocks are building up at the end of the year and unless any big weather calamity or labor shortage prevents Malaysian palm oil FFB [fresh fruit bunch] collection, we see a further increase in stocks," said Anilkumar Bagani, head of research at Mumbai-based vegetable oil brokerage Sunvin Group, in a Nov. 10 note.
Malaysia's palm oil exports fell 12% month on month to 1.418 million mt in October, the MPOB said. The drop was less than the 13% dip expected by the Platts survey.
However exports are picking up in November as Malaysia is currently imposing lower duties than its larger rival Indonesia, trade sources said.
Indonesia set its crude palm oil reference price at $1,283.38/mt for November, raising its export tax to $200/mt from $166/mt in October. Indonesia also imposes a $175/mt export levy on crude palm oil exports.
"Malaysian palm oil exports during November are expected to grow, but higher prices would restrict the growth," Bagani said.
"Basically, a neutral report, thus all eyes will be on November production and export numbers," said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari, reacting to the MPOB update.
Trade sources expect Malaysia's November palm oil output to be lower than for October, while demand was seen rising from October.
Gain access to exclusive research, events and more