Malaysia Oct palm oil output seen hitting 2-year high
KUALA LUMPUR: Malaysia's palm oil output is expected to have risen to a two-year peak in October, lifting inventories to their highest since January 2016, boosted by holiday season demand and a higher number of working days, a Reuters poll showed.
Last month's output in the world's second-largest producer of the oil after Indonesia is forecast to rise 9.4 percent from September to 1.95 million tonnes, according to the median response of eight traders, planters and analysts surveyed - the biggest monthly total since October 2015.
The rise likely contributed to gains in end-stocks pegged at 2.2 million tonnes, up 9.6 percent from September, in a fourth straight month of gains, the poll showed.
Gains in production and stockpiles could weigh on benchmark palm prices, which climbed to their highest since Sept. 15 last week before dropping back on concerns of rising output and end-stocks.
Palm oil, the world's most widely used edible oil found in a wide range of products from soap to food products, is currently in line for a third consecutive day of losses. It was last down 0.8 percent at 2,783 ringgit ($656.52) a tonne at the midday break on Monday.
"If production peaks in October, we will gradually see output coming off until February," said Ivy Ng, regional head of plantations research at CIMB Investment Bank.
"Yields (this year) are higher than last year, but still lower than 2015 on the El Nino's lingering impact. However, January 2018 should see higher production than January 2017 as the El Nino impact lasts for two years."
The survey's respondents also said they saw exports rising 2.3 percent in October to 1.55 million tonnes from September, a fourth month of gains and the highest level in over a year, supported by demand from major buyers.
India and China, key buyers of palm oil, celebrated Diwali and the Mid-Autumn festival respectively in October this year, driving up usage of the tropical oil.
Demand growth, however, is expected to weaken from November onwards.
"India's imports will lessen after Diwali, November demand will be slower due to the winter months," said a Kuala Lumpur-based trader, adding that demand will remain slow until January or February.
Palm oil consumption typically falls in the last quarter of the year when the northern hemisphere enters winter, curbing demand from regions like China and Europe as palm oil solidifies in cold temperatures.
The median figures from the Reuters survey imply Malaysian consumption of 248,018 tonnes in October.
Official data will be released by the Malaysian Palm Oil Board after 0430 GMT on Nov. 10.