Palm oil stocks beat new all-time high of 2.628m tonnes
Published on: Thursday, October 15, 2015
PETALING JAYA: The nation's palm oil stocks rose for the fifth consecutive month to hit a new all-time high of 2.628 million tonnes in September from the previous record of 2.627 million tonnes at end-December 2012.The stocks last month surpassed December 2012 record by 910 tonnes, but fell short of the 2.70 million to 2.75 million tonnes forecasts by plantation analysts in recent weeks.For the month under review, crude palm oil (CPO) production, however, eased by 4.48per cent to 1.96 million tonnes from a month earlier, according to Malaysian Palm Oil Board's (MPOB) palm oil statistics released recently.ADVERTISEMENT Palm oil exports in September was marginally higher by 4.4per cent at 1.68 million tonnes but imports significantly dropped by 68.6per cent to 8,274 tonnes from 26,421 tonnes a month earlier.The Government early this month imposed a temporary restriction on palm oil imports into Malaysia as one of its measures to curb the rising palm oil stocks and stabilise CPO prices.PublicInvest Research in its sector report yesterday opined that the call to minimise palm oil imports into Malaysia had little impact on the palm oil inventories as "it only makes up 5per cent of our palm oil supplies."Furthermore, Malaysia's total refining capacity, which stands at 25.5 million tonnes, far exceeded the annual CPO production of 19.5 million tonnes, indicating that local refiners needed to import CPO to sustain their optimal utilisation rate, it added.ADVERTISEMENT The research unit also said the CPO prices had recently moved in tandem with the US dollar-ringgit volatility."Our CPO price is recently more sensitive towards currency movement rather than other factors such as crude oil price, soybean oil price, El Nino pattern and CPO exports data.
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"Year-to-date, the US dollar-ringgit strengthened by 14.6pert cent to RM4.16 while our CPO price rose 3.6per cent to RM2,224 per tonne."The CPO price is averaging around RM2,174 per tonne, compared with RM2,485 per tonne in 2014," it added.the third-month benchmark CPO futures for December contract as at 5pm was traded RM43 higher at RM2,260 per tonne.At last week's MPOB International Palm Oil Congress, Dr James Fry of LMC International predicted that the CPO price could rise to US$600 (RM2,460) per tonne by the end of the first quarter 2016 due to tighter supply conditions.For 2016, Fry expects Indonesia to consume around 2.6 million tonnes of biodiesel, an increase from his estimate of 1.2 million tonnes of biodiesel consumption this year.Stay up-to-date by following Daily Express’s Telegram channel.
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On another note, PublicInvest Research expects palm oil exporters will benefit from the Trans-Pacific Partnership Agreement (TPPA).Under the TPPA, Malaysian palm oil exporters will enjoy duty free with four new non-free trade agreement markets, namely the United States, Canada, Mexico and Peru, which collectively accounted for 3.6per cent of Malaysia's CPO exports.