Palm oil inventories in Malaysia fell more than investors
had expected to their lowest in 14 months, sapped by unexpectedly high exports,
at a time when production is being undermined by yield stress.
Malaysia's stocks of the vegetable oil dropped for a fourth
successive month, falling below 1.7m tonnes for the first time since April last
year, the Malaysian Palm Oil Board said.
The figure, for June, reflected in part disappointing output
growth heading towards what is, in September and October, the peak of the
In part, this year's output slowdown reflects a hangover, in
tree stress, from a bumper palm fruit harvest in 2010-11.
Meanwhile, exports from Malaysia, the world's second-biggest
palm oil shipper, have consistently beaten expectations, topping 1.5m tonnes
for the month, and exceeding investors' forecasts by 60,000 tonnes.
In part, this reflects tax changes in top-ranked shipper Indonesia
which favour exports of processed palm products rather than raw palm oil, in an
attempt to keep crushing margins for the country's own mills.
|Malaysia palm oil data, change on month, (diff. from market forecast)|
Production: 1.471m tonnes, +6.3%, (-1.9%)
Exports: 1.531m tonnes, +8.7%, (+4.1%)
Imports: 24,794 tonnes, -39%
Stocks: 1.699m tonnes, -4.9%, (-4.0%)
Data for June. Sources: MPOB, Bloomberg
Malaysia's crude palm oil imports, essentially all from
Indonesia, tumbled to less than 25,000 tonnes, down 72% year on year.
The data were, on the Kuala Lumpur futures market,
overshadowed by a weak day for the soybean complex in Chicago, and by
statistics from cargo surveyors showing a drop in Malaysia's palm exports so
far this month.
The decline was pegged at 13.5% by Intertek Testing
Services, and at 22.2% by Societe Generale de Surveillance.
Palm oil for September, the benchmark contract, closed down
0.7% at 3,130 ringgit a tonne.
However, Rabobank analysts maintained a bright outlook for
palm oil futures, saying they would be underpinned by the prospect of weather
damage not just to oilseed crops in drought-hit US, but also those in India,
where the monsoon has continued to run short of average.
The deficit for the first nine days of July reached 25%,
following a shortfall in June too, amid talk of an El Nino, which is often
linked to weak monsoon rains.
"The main soybean-growing region in Central India is
currently experiencing a 50% moisture deficit, with the rapeseed region in the
north west of the country experiencing nearly a 70% deficit," Rabobank said.
The last season of weak monsoon, in 2009-10, saw Indian
vegetable oil imports rise to a record 7.7m tonnes.
"In that particular instance, a large share of the country's
deficit was met with soyoil imports.
"However, given the current global soybean deficit we expect
India will be left to rely more heavily on palm oil imports," the bank said,
foreseeing "further upside" to palm oil prices "as the fundamental outlook
across the entire oilseeds complex becomes increasingly bullish".