The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange ends up at 2,757 ringgit a tonne at the close of trade. The contract has gained 0.95 percent this week. Trader’s said that expectations of stronger export demand contributed to palm's gains as Malaysian Palm Oil Exports data for 1-10th October were up by 18% compared to the same period of the last month. Malaysia September monthly export rise of 1.81% to 1.515 million tons was the main surprise, coming well below market expectation of 7 to 10% rise. China, Pakistan and Bangladesh were the main destinations by increase in volume from August to September, while shipment to India was unchanged and to Netherlands, the main E.U destination was down 17.5% or the lowest in the year.
Production was within expectation easing by 1.66% to 1.780 million tons or 3.78% higher than same time last year but lower than September 2015 by 9.14%, suggesting yields have some way to recover. Slack in production from Sabah and Sarawak been the main drag in overall output. Overall Malaysia Fresh Fruit Bunches (FFB) yield per-hectare (ha.) was almost unchanged at 1.63 tons/ha. in September from 1.62 in the previous month, however yield in Sabah stayed unchanged at 1.50 tons/ha. while in Sarawak fell to 1.51 from 1.54 tons/ha. Meanwhile yields in the state of Johor rose 4.57% to 2.06 tons/ha. Johor accounts for 30% of the total Malaysia production. Sabah and Sarawak constitute almost half of Malaysia nearly 20 million tons of annual production. Uneven recovery in yields could scupper Malaysia achieving production target of 20 million tons. Slow down in September exports, piled up to push end month stocks up by 4% to 2.019 million tons in or 19 months high, well beyond trade expectation of 2% rise. Indonesia August production reached 3.950 million tons or 5.30% above the previous month and exceeding survey data of 3.500 million tons. August is the start of peak production month in Indonesia and earlier report by Bloomberg of dry weather curbing production failed to make a dent. Indonesia August production was 33% higher than same time last year when severe El-Nino weather wiped off an estimated one million tons of production in the year. Indonesia Jan to Sept output totaled 25.85 million tons or up 23% from same time last year. GAPKI full year estimate is 35.5 million tons.
Export demand consisting of CPO, biodiesel and laurics was up by 20% to 3.043 million tons supported by rise in shipment to China (169%), Bangladesh (51%) and India (21%).Indonesia Jan to Aug is up 19% from same time last year thanks to rise in shipment to India, Bangladesh and Africa. However total export of PKO was down 2%, dragged down by sharp fall in processed PKO by 9% to 126,630 tons but exports of CPKO was up 83% though the volumes are relatively lower to PKO. CPKO export in August was 21,580 tons or 15% of the total PKO.August end month stocks eased slightly edging down by 1.10% to 2.691 million tons. Domestic RBD Palmolein Scenario RBD palmoelin traded steady at Rs 590/10kg at kandla port on limited demand and also CIF price of the commodity ruled steady at $715/tonne. Sellers are reluctant to sell the commodity at current price level as they are anticipating that demand of RBD palmolein will increase in upcoming Diwali Festival which starts on 19th October. Further the stock of RBD palmolein at ports is sufficient so importers have stopped bulk purchases as the import of RBD palmolein is costlier by Rs 8/10kg which is likely to create supply shortage in local markets. NEXT WEEK: RBD palmolein prices are likely to trade with a Bullish bias amid upcoming festival demand. (By Commoditiescontrol Bureau; +91-22-40015516)
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