International palm oil prices have fluctuated and fallen recently. On October 11, the closing price of the crude palm oil benchmark contract of Bursa Malaysia Derivatives Exchange (BMD) was RM3,551/ton, a decrease of RM213/ton, or 5.7%, from before the “Double Festival”, falling to the lowest since mid-June; spot price On the other hand, the FOB quotation of Malaysian palm oil for the November shipping date is US$800/ton, which is US$35/ton lower than before the “Double Festival”, a decrease of 4.4%. Mainly because Malaysian palm oil inventories have increased for the fifth consecutive month, suppressing palm oil prices in producing areas.
Supply and demand data for September released by the Malaysian Palm Oil Board (MPOB) showed that Malaysian palm oil stocks hit an 11-month high at the end of September due to a decline in exports. Among them, palm oil stocks at the end of September were 2.314 million tons, an increase of 9.6% from the previous month, but slightly lower than the 2.38 million tons expected by analysts; crude palm oil production in September was 1.829 million tons, an increase of 4.3% from the previous month, lower than market expectations. of 1.86 million tons; export volume in September was 1.196 million tons, a month-on-month decrease of 2.1%, lower than market expectations of 1.32 million tons; import volume in September was 49,000 tons, a month-on-month decrease of 55.7%, lower than market expectations of 80,000 tons .
Malaysian palm oil inventories are expected to continue to rise in October and basically reach the highest level during the year.
On the one hand, October is still the high production season for Malaysian palm oil, and output is expected to remain high. According to data from the South Malaysian Oil Palm Association (SPPOMA), Malaysia’s palm oil production increased by 7.7% month-on-month from October 1 to 10, the unit yield increased by 5.7% month-on-month, and the oil yield increased by 0.36% month-on-month.
On the other hand, although exports of Malaysian palm oil have accelerated after the price of palm oil fell, domestic vegetable oil inventories in major importing countries such as India are high and subsequent import growth is limited, which will restrain the growth of Malaysian palm oil exports in October. Data from shipping survey agency ITS showed that Malaysian palm oil exports from October 1 to 10 were 395,000 tons, a month-on-month increase of 12.5%; data from another agency, AmSpec, showed that exports were 396,000 tons, a month-on-month increase of 29.6%.
Overall, it is expected that Malaysian palm oil inventories will accelerate to peak in October, and palm oil prices will remain weak and volatile under high inventories. After November, palm oil will enter the production reduction season, and stocks will gradually fall after stabilizing at high levels from November to December. In addition, El Niño usually leads to high temperatures and droughts in Southeast Asia, which may cause palm oil production in Southeast Asia to decrease next year, affecting global palm oil supply in the later period. It is expected that Malaysian palm oil prices may gradually strengthen in the late fourth quarter.
