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Informist, Tuesday, Dec. 10, 2024

 

--Malaysia palm oil board: Nov CPO output down 9.8% on month at 1.62 mln tn 

--Malaysia palm oil board: Nov CPO exports 1.48 mln tn, down 14.74% on mo 

--Malaysia palm oil board: Nov-end palm oil stock 1.83 mln tn, dn 2.6% on mo 

 

MUMBAI – Production of crude palm oil in Malaysia fell 9.8% on month to 1.62 million tonnes in November, according to preliminary data from the Malaysian Palm Oil Board released Tuesday. The month-end palm oil stocks and exports also fell in November, the data showed. 

 

In November, Malaysia's palm oil exports fell 14.74% on month to 1.48 million tonnes and stocks fell 2.6% to 1.83 million tonnes, the data showed. Palm oil inventories slipped in November for a second consecutive month, as production fell more than expected to its lowest level for the month in four years, according to financial news organisation The Edge Malaysia. 

 

A Reuters poll had forecast stocks in November at 1.79 million tonnes, output at 1.69 million tonnes, and exports at 1.52 million tonnes. Malaysia is the world's second-largest producer of crude palm oil, and India is the largest consumer of edible oils. 

 

"There are two reasons for low productivity in Malaysia. First, as trees are getting older, lower output is expected, and second, due to floods in producing regions," said Rahul Chauhan, director of IGrain India. Palm trees have a lifespan of nearly 25 years. They are fruitful till 10 years and after that their productivity starts to decline. Around 25 years of age, trees become uneconomical. 

This reduction in palm oil production was primarily due to unusually heavy rainfall, which has led to flooding in northern Malaysia, Indrajit Paul, head of research at Agrocorp International, said.

 

According to media reports, Malaysia's meteorological department has forecast a monsoon surge from Dec. 8 to Dec. 14, which could bring continuous rainfall to the east coast of Peninsular Malaysia and parts of Sabah and Sarawak on Borneo Island.

 

"This is a seasonal decline that happens every time. From November to February, palm oil production will be low and from March onwards, a rise in production will be seen," Sunvin Group Chief Executive Officer Sandeep Bajoria told Informist.

 

Palm oil prices are rising at Bursa Malaysia Derivatives in anticipation of low production. "Last week there was a sharp increase in palm oil prices at Bursa Malaysia Derivatives due to the above-mentioned factors," said Chauhan of IGrain.

 

"The current upward momentum in palm oil prices, as seen in the BMD, reflects tightening inventories and supply concerns," Paul said.

 

"Palm is the costliest oil around as of now," Bajoria said. Palm oil is trading at around $1,310 per tonne for the December shipment, he said. Imports in December in India are likely to fall and could come down to 550,000-600,000 tonnes, Bajoria said. 

 

Currently, December soyoil shipments were at $1,160 per tonne including cost, insurance and freight, Bajoria said. "The difference between palm and soyoil is around $150 per tonne. As a result, imports of soyoil will rise," Bajoria said. Indian importers are booking strong soyoil shipments for December, January, February and March, and soyoil shipments should be at least 400,000 tonnes per month, he said. The imports may rise to 500,000 tonnes per month during Apr-Jul, he added.

To check excess edible oil imports, India on Sept. 14 increased the basic customs duty on crude varieties of palm oil, soyoil, and sunflower oil to 20% from 0%, which effectively increased the total import duty on these oils to 27.5% from 5.5%. The increase in import duties came after more than two years.

 

Meanwhile, to promote domestic oilseed cultivation, India on Oct. 3 allocated INR 101 billion for the National Edible Oil Mission to make India self-sufficient in edible oils. 

 

The following table details Malaysia's palm oil output, exports, and stocks for November compared with the previous month:

 

	Commodity	November(in tn)	October(in tn)	MoM change (in %)
Production	Crude palm oil	1,621,294	1,797,348	(-)9.8
Exports	Palm oil	1,487,212	1,744,265	(-)14.74
	Biodiesel	11,744	13,509	(-)13.07
Stocks	Crude palm oil	907,494	943,472	(-)3.81
	Processed palm oil	928,673	941,711	(-)1.38
	Total palm oil	1,836,167	1,885,183	(-)2.60

 

End

US$1 = INR 84.85

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

 

Reported by Anjali Lavania

Edited by Akul Nishant Akhoury

 

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