Malaysia's end-July palm oil stocks to hit near two-year high
Palm oil stocks are expected to rise to 2.25 million metric tons, up 10.8% from June, according to a median estimate of 11 traders, planters, and analysts polled by Reuters.
Crude palm oil output is expected to reach 1.83 million metric tons, an 8% increase from the previous month, snapping last month's decline and hitting a one-year high.
Stocks are expected to increase due to a jump in production and adjustments to domestic consumption figures, said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.
Bagani said that a stock level above 2 million tons during peak production season is not concerning, given that Indonesia's palm oil export supplies remain tight due to their ongoing B40 biodiesel mandate.
"However, palm oil has to compete hard with South American and Black Sea soybean oil, which have had very good crop yields this season," he said.
Exports of palm oil products are projected to grow 3.2% to 1.3 million metric tons, reversing last month's decline, the survey showed.
Malaysian July exports were capped by aggressive selling at a discount by rival Indonesia, which wanted to ship as much as possible before a higher export duty becomes effective in August, said Tajgir Rahman, general manager, trading and procurement at IFFCO.
The Malaysian Palm Oil Board (MPOB) is scheduled to release its monthly data on August 11.
Breakdown of July estimates (in metric tons):
* Official stocks of 2,030,580 tons in June plus the above estimated output and imports yield a total July supply of 3,918,275 tons. Based on the median of exports and closing stocks estimate, Malaysia's domestic consumption in July is estimated to be 368,275 tons.
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