Palm oil inventories in Malaysia rose to a record high - but
not one quite as elevated as investors had expected, allowing prices of the vegetable
oil to tick higher, and make a stab at closing their large discount to soyoil.
Palm oil stocks in Malaysia, the second-ranked producing and
exporting country, hit 2.56m tonnes last month, beating the previous record,
set in October, by nearly 50,000 tonnes.
The increase reflected a fall in exports at a faster rate than
that in production, which came in well ahead of expectations, buoyed by palm
fruit yields which, at 2.0 tonnes per hectare, failed to decline as seasonal
patterns suggest, and set an all-time high for November.
"Yields have remained more than 25% above the 12-month
moving average for the past three months," Rabobank said.
'Prices to fund
However, the inventory figure, while setting a record
nonetheless fell a little short of expectations, helped by a shortfall in
imports below forecasts.
The miss helped palm oil futures, still within an ace of
their three-year low, close up 0.7% in Kuala Lumpur at 2,313 ringgit a tonne.
Malaysia palm oil data, November, change on month and (on forecast)
Production: 1.888m tonnes, -2.6%, (+46,849 tonnes)
Exports: 1.659m tonnes, -5.7%, (-40,880 tonnes)
Stocks: 2.563m tonnes, +2.3%, (-17,100 tonnes)
Source: Malaysian Palm Oil Board
Indeed, Rabobank restated an upbeat view on palm oil prices,
despite the resilient yields and record stocks.
The relatively low level of prices, down more than one-third
from an April high, "already reflects current high stock levels", adding that "prices
are likely to fund support at current levels", given the expectations that a
seasonal drop in output early next year will undermine inventories.
Furthermore, the discount of palm oil to soyoil, the rival
vegetable oil with which it is interchangeable for many uses, has reached
historically-high levels of more than $420 a tonne, compared with an average of
$162 a tonne.
Compared with crude oil, which palm oil is linked to as a
source of biodiesel, the discount is $182 a tonne. On average, palm oil has a
"We do not view this price discounts as sustainable," the
"A combination of moderating [Malaysian] yields and a
drawdown in other vegetable oil availabilities will cause Kuala Lumpur palm oil
prices to rise from currently depressed levels."