|End-of-day quote - 10/22|
Malaysia end-Sept palm oil stocks mark first gain in 7 months
|10/10/2019 | 02:57am|
KUALA LUMPUR (Reuters) - Palm oil inventories in Malaysia, the world's second-largest producer of the edible oil, rose for the first time in seven months in September, data from an industry regulator showed on Thursday, as production rose amid slowing exports.
Inventories in the Southeast Asian nation rose 9.3% from August to 2.4 million tonnes, their highest in five months, after snapping six months of consecutive declines, data from the Malaysian Palm Oil Board (MPOB) showed. <MYPOMS-TPO>
Higher stockpiles could dampen benchmark palm oil prices, which hit a two-month low at the end of September. Prices were last up 0.4% at 2,205 ringgit ($526.06) a tonne by the midday break on Thursday. [POI/]
Exports in September dropped 18.8%, after rising for two consecutive months to a three-year top of 1.4 million tonnes. <MYPOME-PO>
Traders attributed the decline in exports to lower demand from India, after the world's largest palm oil importer raised the tax on refined palm oil from Malaysia to 50% from 45% for six months from September to curb imports and boost local refining.
"Demand in the fourth quarter will be slower than usual, especially as Indonesian prices are more competitive," said a Kuala Lumpur-based trader.
"Therefore, stocks should continue to build until November."
Palm stockpiles rose along with higher production in September. Output increased by 1.2% to 1.8 million tonnes to its strongest in 10 months, but came in lower than expected. <MYPOMP-CPOTT>
"Production is lower than market expectations. This is due to persistent dry weather and a longer-than-usual haze in major palm oil-producing areas, coupled with less working days in September which resulted in lower production," said Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil broker.
"Output is likely to increase a little towards peak production, but not by much."
An industry analyst last month forecast that Malaysian palm oil inventories would rise to 2.5 million-2.6 million tonnes by December, while an official from the MPOB said inventories may fall to 2 million tonnes by year-end.
A Reuters survey had forecast palm oil stockpiles at the end of September to rise by 11.9% to 2.52 million tonnes. Production was seen gaining 4.6% to 1.91 million tonnes, and exports were seen falling 19.4% to 1.40 million tonnes.
(Reporting by Emily Chow; Editing by Tom Hogue and Sherry Jacob-Phillips)
By Emily Chow