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Malaysia Oilseeds and Products Update (October) 2008
Malaysia's crude palm oil (CPO) production dropped by 1.3 per cent to 1.6 million tonnes in September according to the USDA Foreign Agricultural Service. The palms are showing signs of biological stress. Despite the decrease in CPO output, weaker PO exports resulted in a slight increase in carryout stocks to just below 2 million tonnes at the end of September. Weaker overseas demand and increasing stocks contributed to a further drop in CPO prices in October. PO exports declined by 12 per cent to 1.3 million tonnes in September.
Production
The Malaysian Palm Oil Board (MPOB) reported that total crude palm oil (CPO) production decreased by 1.3 percent to 1.6 MMT in September 2008. Peninsular Malaysia’s production declined 5.5 percent while East Malaysia’s output increased by 4.4 percent. Compared to September 2007, output during September 2008 was 1.5 percent lower. After fourteen months of strong growth, the palms are showing some signs of biological stress. Post estimates CPO output to decline to 4.1 MMT during the Oct-Dec quarter and 3.6 MMT during the Jan-Feb quarter in 2009.
Price
Weaker overseas demand for palm oil; increasing carry-in stocks; heavy losses in the Chicago’s CME soyoil futures; and hedge selling contributed to a further drop in CPO prices during the month of October. The CPO price was lower for the second consecutive month when compared to the same month of the previous year. The January future contact CPO price plunged to a 2008 low of RM1,378/ton before recovering to RM1,459 on Oct 28 (which was still 67 percent lower than its high of RM4,500/ton in the month of March). However, Post expects a rebound in palm oil prices once the palms enter the seasonal low production stage during the Oct-Dec quarter. Overall, the monthly average delivered CPO price dropped from RM2,350/MT in September to RM2,105/MT in October. For comparison, the average CPO price for October 2007 was RM2,771/MT. Refined/Bleached/Deodorized (RBD) Palm Oil FOB average price also dropped from US$743/MT in September to US$560/MT in October.
Stocks
Despite a drop in palm oil production, a sharper decrease in PO exports resulted in an increase in carryout stocks to just below the 2 MMT mark at the end of September. With an expected decrease in CPO output in October-December, Post expects the stock level to drop to the 1.5 MMT level by the end of December.
Trade
A preliminary official report shows PO exports declined by 12 percent to 1.3 MMT in September.
| Revised 2006/07 | Prelim 2007/08 | Forecast 2008/09 | |
| (1,000 MT) | |||
| Beg Stock | 1,800 | 1,463 | 1,949 |
| Production | 15,292 | 17,565 | 17,200 |
| Imports | 265 | 408 | 400 |
| Total Supply | 17,357 | 19,436 | 19,549 |
| Exports | 13,703 | 15,011 | 15,060 |
| Domestic Use | 2,191 | 2,476 | 2,789 |
| Ending Stock | 1,463 | 1,949 | 1,700 |
Further Reading
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- | You can view the full report by clicking here. |
November 2008
