Singapore — Malaysia's 2017 palm oil production, which had been low enough to cause concerns, finally witnessed a boost in October with the production rising 12.86% month on month to 2 million mt, data from the Malaysian Palm Oil Board, or MPOB, released on Friday showed.
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October is the first month to cross the 2 million mt mark since October 2015, when the production had reached 2.04 million mt.
The production in 2016 was low due to an El Nino-induced drought in Southeast Asia, and the recovery of palm oil-producing trees from the drought had not been as quick as was expected by most of the market.
The higher October production, which had been predicted earlier by Malaysia, led the inventory levels to rise 8.39% month on month to 2.19 million mt.
However, market analysts said that although the October production numbers were either in line with the market expectations or even slightly above, the domestic usage of palm oil is around 70,000 mt more than the market expectations. As a result, the inventory levels actually are lower than the market expectations of 2.25-2.3 million mt.
A Singapore-based market source said that lower-than-expected Malaysian inventories signals a bullish trend for the prices .
Exports of palm oil were also higher in October, rising 2.04% month on month to 1.55 million mt.
For October, PME exports totaled 5,572 mt. According to ITS cargo surveyors shipping data, the October exports were estimated to be around 1,400 mt.
Europe is usually not an active buyer of PME during the winter months because the fuel tends to solidify and only minimal amount is be used for winter FAME blends.
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