Malaysian palm oil stocks at the end of November slipped by 1.09% from October to 2.42 million tonne, ending the upward run which saw stocks rise for six months straight, data from the Malaysian Palm Oil Board (MPOB) showed Tuesday.
The figure was outside of average industry estimates of 2.44 million tonne and 2.48 million tonne as polled by newswires Reuters and Bloomberg, but nonetheless remains relatively high compared to levels seen earlier this year and in previous years and comes on the back of healthier production in the last few months and a slower export pace.
Exports in November fell by 5.67% from October to 1.397 million tonne, again out of expectations from industry estimates of 1.52-1.53 million tonne with crude palm oil (CPO) exports falling by 12.98% to 323,326 tonne and processed palm oil (PPO) exports 3.22% lower at 1.07 million tonne.
Estimates from cargo surveyors Intertek Testing Services (ITS), Amspec Agri Malaysia and SGS had earlier pegged exports at 1.531 million tonne, 1.38 million tonne and 1.41 million tonne respectively.
Meanwhile, CPO production in November also slipped to 1.789 million tonne, 7.66% less than October, with the largest drop (by percentage) seen in Sarawak at 9.65% lower at 400,237 tonne, followed by Peninsular Malaysia (7.37% lower at 959,214 tonne) and Sabah (6.38% lower at 429,419 tonne).
Production drop is lower than multiple forecasts
The drop in production was also below newswire survey figures which had put output at 1.81-1.82 million tonne, while estimates from the Malaysian Palm Oil Association had production at 6.4% lower or around 1.81 million tonne.
Total CPO production for the first 11 months of 2023 has hit 17.003 million tonne, 1% ahead of the pace in the same period a year ago.
Palm oil imports for November were reported at 39,696 tonne, 16.5% less than in October and comprising only of PPO volumes, likely due to lower CPO availability from neighbouring Indonesia.
This resulted in November’s local disappearance or implied consumption estimated at 458,485 tonne, 23.7% more than October, with some market sources attributing this potentially to higher local biodiesel use.
While production is expected to continue to fall in December following the end of the seasonal high, export demand remains a concern with cargo surveyor estimates for December 1-10 showing a drop of 4.1-7.4% against the same period in November.
The active third-month CPO futures contract for February-delivery on Bursa Malaysia had closed 17 points lower to MYR3,724/tonne at the midday close, trading both ways in the morning as it tracked overnight strength from rival soybean oil futures on CME while demand concerns and positioning were also taking place ahead of the release of the MPOB results.
Note: Prior to the release of the November data, MPOB had revised October exports of CPO to 371,537 mt from 357,043 mt, PPO exports to 1,109,149mt from 1,109,022 mt, and CPO stocks to 1,394,671mt from 1,396,485 mt, resulting in estimated local disappearance for October at 370,798 mt instead of 383,605 mt reported previously.
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