Malaysian palm oil production to rise to 20.3m tonnes this year against 19.5m tonnes last year due to the expected good weather
by BERNAMA/ pic by MUHD AMIN NAHARUL
CONCERNS about supply shortfalls and higher export scenario sentiment saw Malaysia’s crude palm oil (CPO) continued its uptrend mode after recording its first major recovery in October, surpassing the 2018 level for the first time.
Singapore-based Palm Oil Analytics owner and co-founder Dr Sathia Varqa said October’s CPO futures jumped 15% RM318 (US$77) and retained the healthy gains in November, rising by RM111 or 4.51% to a new high last Friday.
At last Friday’s close, CPO futures January 2020 ended at a 22-month high of RM2,573 per tonne on last-minute buying interest, while in the physical market, November South was RM20 better at RM2,480 per tonne.
Quoting the Malaysian Palm Oil Association, Sathia said October production output was up by 1.02% from the previous month, which was a lower pace compared to the 13% and 6.0% rise in October 2017 and October 2018, respectively.
On average, October production rose by 1.61% to 1.87 million tonnes.
The five-year average of October production is at 1.92 million tonnes.
He said the October output data is critical to determine the full year estimate after a lacklustre production in August and September.
“August, September and October are the three peak production months in Malaysia, making up 35% of the annual output,” he told Bernama.
Sathia said the actual Malaysian Palm Oil Board (MPOB) data, due today, will further reinforce the market fundamental.
MPOB previously forecast CPO production will start to decline from November until December, following the normal downward production trend.
The output increased by 1.2% to 1.8 million tonnes in September and 4.64% to 1.82 million tonnes in October.
The board also forecast that the Malaysian palm oil production to rise to 20.3 million tonnes this year against 19.5 million tonnes last year due to the expected good weather.
Sathia said CPO product export rose 10.63% in October compared to September, lifted by a threefold rise in shipment to the African continent and a 31% increase to the European Union market.
Export to India and other sub-continent, however, fell by 14%.
“Exports are forecast to advance by an average of 13% to 14%, mainly on strong shipment to the African continent,” he said, adding that Egypt, South Africa and Kenya are the main regular buyers of Malaysian CPO.
“Biodiesel exports, which is not included the headline numbers, is expected to be down by 35% to 40%,” he noted.
Meanwhile, shipment to India will see a noticeable fall in October to the lowest in the year to around 150,000 to 200,000 tonnes from the usual over 400,000 tonnes.
Last week, Primary Industries Minister Teresa Kok (picture) said the current increase in CPO price is an indication that the price will continue to rise until next year.
She said the decline in Malaysian palm oil stocks is positive as it proved that the government’s efforts to increase palm oil exports had been successful.
Malaysian palm oil exports jumped by 19.7% to 12.6 million tonnes from January to August 2019 compared to 10.53 million tonnes in the corresponding period last year.