Malaysia Palm Oil Production at Record High

MALAYSIA – Crude palm oil (CPO) production reached 2.0 million tons in September 2012, which combined with sluggish exports, pushed ending stocks to a record 2.5 million tons. Final 2011/12 CPO output was 18.2 million tons for 2011/12. Exports recorded a 4.5 per cent increase compared to the previous month, equaling 1.5 million tons.

A recently announced $141.5 million replanting program for independent smallholders (to cover about 14 per cent of Malaysia five million hectares of palm area) will pull some area out of production in 2013, but output is still forecast to rebound in 2012/13.

Price

Growing stocks led to the monthly average delivered CPO price dropping from $887/ton in September to $735/ton in October. In October 2011, the average was $1,029/ton. Refined/Bleached/Deodorized (RBD) Palm Oil FOB average price dropped from $943/ton in September to $780/ton in October in tandem with the drop of CPO price.

Stocks

Stocks grew from 2.11 million tons in August to a record 2.48 million tons at the end of September, marking a record for marketing year ending stocks. The marginal increase of 4.5 per cent in exports had little impact in reducing stock levels.

Trade

A preliminary report shows an increase in palm oil exports of 65,000 ton to 1.5 million tons in September. Exports increased in September due to improvement in demand from China and India, which recorded 20.8 and 15.5 per cent month-to-month increases respectively. September 2012 exports were 2.7 per cent lower than September 2011.

Read the full report here.