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Palm Oil Ends Little Changed as Rising Inventories Erase Gains

Sept. 19 (Bloomberg) -- Palm oil closed little changed as concerns over rising stockpiles in Malaysia amid a seasonal gain in output countered demand spurred by the biggest drop in 19 months yesterday.

The December-delivery contract settled at 2,859 ringgit ($934) a metric ton on the Malaysia Derivatives Exchange. Futures closed 4.2 percent lower yesterday, the biggest drop for the most-active contract since Feb. 23, 2011.

Stockpiles in Malaysia, the largest grower after Indonesia, climbed to 2.12 million tons in August, the highest level since October, the Malaysian Palm Oil Board said Sept. 10. Output fell 1.7 percent to 1.66 million tons last month from a month earlier, board data showed. Production typically peaks from July to October. Reserves in Malaysia are set to climb to a record, Dorab Mistry, a director at Godrej International Ltd., said Sept. 7, without giving a timeframe.

“Market players are still concerned about a possible buildup in stocks to maybe a record high,” said Donny Khor, associate director for futures and options at OSK Investment Bank Bhd. “Production is still on the high side and may be up 15 to 20 percent for the whole month. That’s quite a lot for the production side, even though we’re looking at better export numbers.”

Malaysian exports rose 12.2 percent to 680,112 tons in the first 15 days of September from the same period in August, surveyor Intertek said Sept. 15. Shipments gained 12.3 percent to 660,955 tons, said Societe Generale de Surveillance yesterday. Malaysian inventories reached a record high of 2.27 million tons in November 2008.

Palm Use

Palm oil consumption may increase through the next quarter as world supplies are ample while production of competing seed oils declines, Oil World said. India, China and the European Union may boost imports of palm oil as world output increases 3.1 million tons or 3.2 million tons in the year beginning Oct. 1, the Hamburg-based researcher said in a report yesterday.

November-delivery soybeans advanced 1.5 percent to $16.6425 a bushel on the Chicago Board of Trade. Soybean oil for December climbed 0.4 percent to 55.53 cents a pound.

January-delivery palm oil gained 0.8 percent to close at 7,802 yuan ($1,236) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month rose 0.6 percent to end at 9,876 yuan a ton.

To contact the reporter on this story: Ranjeetha Pakiam in Kuala Lumpur at rpakiam@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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