Palm oil output expected to rise

Palm oil output expected to rise

YOGYAKARTA: Malaysia palm oil stocks are set to recover in May and rise faster in the next three months as Asian consumers take up more soyaoil that trades on par with the tropical oil, a senior official said yesterday.

Malaysian Palm Oil Board (MPOB) director-general Datuk Dr Mohd Basri Wahid said palm oil stocks usually fall in the June-August period as top buyers India and the Middle East stock up for religious festivals from August starting from Ramandan fasting month. But ample South American supplies of soyaoil have made the normally expensive vegetable oil trade at same level as FOB palm olein seen at US$810 (RM2,632.5) for June delivery, prompting a switch of orders away from Malaysia, the No. 2 palm oil producer.

Also, India has record stocks of oilseeds for crushing, discouraging crude palm oil imports from top producer Indonesia as well as Malaysia. "Palm oil stocks and exports seasonality in Malaysia has been turned upside down," Mohd Basri said in an interview ahead of an industry meet in the historic Indonesian city of Yogyakarta. "April palm oil stocks hit 1.6 million tonnes and we will go way above that in the next three months," he said, declining to give details.

MPOB, a key regulator for the industry, will release its May palm oil stocks, production and export data on June 10. Adding to the palm oil stock build-up in Malaysia is a stronger output from May and June onwards as El Nino-driven hot weather eases and stops aggravating yield stress in oil palms, Mohd Basri said. But the effects of the unusual weather condition may be felt during the sesaonal peak output season in October as higher temperatures in the first quarter of this year may have stunted oil-rich palm flowers that take six months to bear fruit.

"El Nino was not as bad as we feared it would be. There could a moderation in the output but I believe we can meet our target range of 17 and 18.1 million tonnes for production this year," Mohd Basri said. "It will just be at the lower end." - Bloomberg

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