Palm-oil reserves in Malaysia, the second-biggest supplier after Indonesia, declined to a six-month low in February after production slumped for a fourth straight month, according to a Bloomberg News survey.
Stockpiles (PASTTOTL) fell 5.4 percent to 1.9 million metric tons, dropping below the 2 million-mark for the first time since August, according to the median estimate in the survey of three analysts and two plantation companies. Inventories are still expected to be 28 percent higher than a year earlier, according to the survey. Official estimates are due for release March 12.
Declining reserves may highlight tighter global edible-oil supplies as soybean output drops in South America after a drought. Lower palm-oil stockpiles may help boost prices in Malaysia that gained 2.9 percent this year, while potentially raising profits for companies including Sime Darby Bhd. (SIME)
“It’s a lean season for palm oil production” Vimala Reddy, an analyst at Karvy Comtrade Ltd., said by phone from the Indian city of Hyderabad. “Export demand has been better in terms of comparison to January.”
Output (PALPCPO) fell 8.3 percent to 1.18 million tons last month, the lowest since February last year, from 1.29 million tons in January, according to the survey. Exports dropped 7.3 percent to 1.28 million tons, the survey showed. Shipments (ITSPALM) fell 10.5 percent to 1.18 million tons in February from a month earlier after 12 percent drop in January, according to surveyor Intertek (ITSPALM).
The May-delivery contract gained 0.7 percent to 3,266 ringgit ($1,079) a ton on the Malaysia Derivatives Exchange yesterday. Futures advanced 6.2 percent last month, the best monthly performance since December 2010, after reaching an eight-month high of 3,321 ringgit on Feb. 28.
Palm oil may gain to 4,000 ringgit on declining global vegetable-oil stockpiles, Dorab Mistry, director of Godrej International Ltd., said yesterday. The global soybean harvest may drop by 19 million tons in 2011-2012, the most ever, Hamburg-based researcher Oil World said on Feb. 28.
Exports may pick up as India and China, the biggest consumers, buy more of the tropical oil because of the reduced soybean-oil supply from Argentina and Brazil, Reddy said. Palm oil and soybean oil are substitutes in food and fuels.
Palm-oil production would take time to rebound from the seasonally-low output months of January and February, with a recovery is expected only in June or July, Karvy’s Reddy said. The low-output cycle may end in November, Godrej’s Mistry said.
Output in Malaysia, will reach 19 million tons this year as more plantations mature, Plantation Industries and Commodities Minister Bernard Dompok said Jan. 19. Production gained 11 percent to 18.9 million tons in 2011, according to data from the Malaysian Palm Oil Board, which releases the monthly figures.
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