More Stories

Informist, Thursday, Aug 29, 2024

 

By Anjali Lavania

 

MUMBAI – Malaysian crude palm oil output may rise 4% from a month ago to 1.91 mln tn in August because of fresh fruit bunch production, according to estimates by Indrajit Paul, head of research at Agrocorp International. Malaysian palm oil production in July was at 1.84 mln tn, according to preliminary data from the Malaysian Palm Oil Board.

 

"The production usually peaks during Aug-Oct, driven by a rise in fresh fruit bunch production during these months, leading to higher crude palm oil yields," Paul told Informist. Fresh Fruit Bunch refers to the cluster of fruits harvested from the oil palm tree. Each fresh fruit bunch contains numerous individual fruits, known as palm fruits or oil palm kernels, which are the primary source of palm oil and palm kernel oil.

 

Production during Aug-Oct accounts for approximately 30% of Malaysia's annual crude palm oil output. Oil palm trees have a seasonal fruiting pattern, with peak production often occurring during the second half of the year. The fruit bunches, which are harvested to extract palm oil, are abundant in these months.

Palm oil production is closely tied to the climatic conditions in the tropical regions where oil palm trees are cultivated, such as Malaysia and Indonesia. The rainy season, which typically precedes this period, ensures that the trees are well-nourished and capable of producing more fruit bunches. The months from August to October coincide with the maturation of fruit bunches. The oil content in the fruit is higher during this period, leading to more efficient extraction and consequently, higher production volumes. 

 

Malaysian crude palm oil exports in August are projected to decline by 14.1% on month to 1.45 mln tn, largely due to reduced shipments to key markets such as India, the European Union, and China, Paul said. Last month, palm oil exports from Malaysia were 1.69 mln tn, according to data from the Malaysian Palm Oil Board.

 

"India imported a record palm oil at 1.1 mln tn in July, the highest since August 2023. Due to this, port stocks were quite high. This led to slow demand from India for August. Hence, Malaysian exports are lower," Paul said. Also, China's economy was not performing well, which led to a slowdown in demand," he added. 

 

Malaysian palm oil stocks for August are expected to rise by 12.3% on month to 1.95 mln tn, reflecting a combination of increased production and slowing exports, Paul said. Last month, palm oil stocks in Malaysia were at 1.73 mln tn.

 

In the short to medium term, crude palm oil prices on the Bursa Malaysia Derivatives are likely to remain supported, with a key support level at 3,721 ringgits and resistance at 4,100 ringgits, Paul said. At 1716 IST, the most active November contract of crude palm oil was at 3,942 ringgits per tn, down 0.6% from the previous close.

 

"While festive season demand for edible oils from India may bolster prices, it will be interesting to observe how prices react following the implementation of India's import duty hike on edible oils," Paul said. 

 

According to media reports, the government is considering a proposal to raise import duties on crude and edible oils as domestic prices of most oil seeds have been below the minimum support prices for several months. Malaysia is the world's second-largest producer of crude palm oil, and India is the largest consumer of edible oils.

 

The following table details Malaysia's palm oil output, exports, and stocks for July and the estimates for August with changes: (Figures in mln tn)

 

	August (Estimate)	July	Monthly change (%)
Production	1.91	1.84	4.0
Exports	1.45	1.69	(-)14.1
Stocks	1.95	1.73	12.3

 

End

 

US$1 = 83.87 rupees

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Saji George Titus

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2024. All rights reserved.