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The decline in Malaysian palm oil inventories in October exceeded expectations, and palm oil prices remained supported in November during the production reduction cycle
Transferred from:Xinhua Finance
Malaysia in Octoberpalm oilWeak supply and demand were strong, and inventories at the end of the month fell short of market expectations, bringing obvious benefits to the palm oil market. Looking ahead to the future market, it is expected that horse brown will maintain seasonal production cuts in November, but at the same time, export demand is expected to decline. It is expected that inventories may maintain a downward trend in stocks at the end of November. Support on the supply and demand side will still be strong, which is beneficial to prices.
Specifically, according to October palm oil supply and demand data released by the Malaysian Palm Oil Board (MPOB), Malaysian palm oil production in October was 1.7973 million tons, down 1.35% from month to month; export volume was 1.7324 million tons, up 11.07% month on month; domestic consumption in Malaysia was 0.2104 million tons, up 36.62% month on month; inventory at the end of October was 1.8846 million tons, down 6.32% month on month. Compared with previous market estimates, production was slightly higher than expected, export volume was much higher than expected, and inventory was lower than market expectations. This report had too much impact.
Malaysia in Octoberpalm oilWeak supply and demand were strong, and inventories at the end of the month fell short of market expectations, bringing obvious benefits to the palm oil market. Looking ahead to the future market, it is expected that horse brown will maintain seasonal production cuts in November, but at the same time, export demand is expected to decline. It is expected that inventories may maintain a downward trend in stocks at the end of November. Support on the supply and demand side will still be strong, which is beneficial to prices.
Specifically, according to October palm oil supply and demand data released by the Malaysian Palm Oil Board (MPOB), Malaysian palm oil production in October was 1.7973 million tons, down 1.35% from month to month; export volume was 1.7324 million tons, up 11.07% month on month; domestic consumption in Malaysia was 0.2104 million tons, up 36.62% month on month; inventory at the end of October was 1.8846 million tons, down 6.32% month on month. Compared with previous market estimates, production was slightly higher than expected, export volume was much higher than expected, and inventory was lower than market expectations. This report had too much impact.
On the supply side, horse brown production declined month-on-month in October, which provided favorable support for prices. According to MPOB data, in October, Malaysia's palm oil production fell 1.35% month-on-month to 1.7973 million tons, a year-on-year decrease of 7.22%. According to previous Reuters estimates, horse brown production fell to 1.76 million tons in October 2024, which was slightly higher than expected. However, during the production increase cycle, horse brown production maintained a downward trend, causing the market to expect tight supply. By region, only Sabah saw an increase in palm oil production in October, at 0.4348 million tons, an increase of 10.30%; the decline in palm oil production in the Malay Peninsula was the most obvious, falling 5.42% month-on-month to 0.9688 million tons; and Sarawak production fell 2.40% month-on-month to 0.3937 million tons. In 2024, horse brown maintained a year-on-year trend. The cumulative production of horse brown in January-October was 16.23 million tons, up 1.01 million tons or 6.64% year on year. However, Malaysian palm oil entered the production reduction cycle ahead of schedule. Production in August was high during the year, and production experienced an anti-seasonal decline in September-October. Under the upcoming production reduction cycle, the market still has tight expectations for future supply, supporting palm oil prices.
Also, in terms of yield and oil yield, the average FFB yield in Malaysian plantations in October was 1.55 tons/hectare, down 1.94% month-on-month and 6.06% year-on-year. By region, the average FFB yield in Peninsular Malaysia and Sarawak was 1.63 tons/hectare and 1.38 tons/ha, down 7.39% and 2.82%, respectively; however, in October, the average yield of FFB in Sabah increased 11.19% month-on-month to 1.59 tons/ha.
The overall oil production rate of the Malaysian CPO in October was 20.03%, down 0.04 percentage points from the previous month and 0.31 percentage points from the previous month. By region, CPO oil production rates in major regions have varied. CPO oil production rates in Peninsular Malaysia, Sabah, and Sarawak were 19.95%, 20.91%, and 19.31%, respectively. Among them, the oil production rate of only the Malay Peninsula increased by 0.1 percentage points, and the biggest drop in oil yield in Sarawak was 0.34 percentage points. On a full-year level, the average oil production rate from January to October 2024 was 19.68%, down 0.16 percentage points from the previous year. There is a high downward trend in the yield and oil yield of horse palm fruit skewers, leading to a decline in production in October. At the same time, there may be suppression of horse brown production in November, which is beneficial to prices.
The overall oil production rate of the Malaysian CPO in October was 20.03%, down 0.04 percentage points from the previous month and 0.31 percentage points from the previous month. By region, CPO oil production rates in major regions have varied. CPO oil production rates in Peninsular Malaysia, Sabah, and Sarawak were 19.95%, 20.91%, and 19.31%, respectively. Among them, the oil production rate of only the Malay Peninsula increased by 0.1 percentage points, and the biggest drop in oil yield in Sarawak was 0.34 percentage points. On a full-year level, the average oil production rate from January to October 2024 was 19.68%, down 0.16 percentage points from the previous year. There is a high downward trend in the yield and oil yield of horse palm fruit skewers, leading to a decline in production in October. At the same time, there may be suppression of horse brown production in November, which is beneficial to prices.
On the demand side, Malaysia's monthly palm oil exports in October were 1.7324 million tons, up 11.07% month on month and 18.17% year on year, far higher than the five-year average of 1.54 million tons. Earlier, Reuters data estimated the export volume for October to be 1.63 million tons, which was much higher than market expectations. On the one hand, import demand increased due to India's inventory replenishment in October; on the other hand, due to the low price spread between Malaysia and India, the competitiveness of Malaysian palm oil increased. By category, Malaysia's CPO exports increased but PPO exports declined in October. Among them, CPO exports were 0.4733 million tons, an increase of 74.07% month on month; PPO exports were 1.2592 million tons, down 2.23% month on month. The cumulative export volume of Malaysian palm oil from January to October 2024 was 14 million tons, a year-on-year increase of 1.68 million tons, or 13.64%.
Among them, India is the largest importer of palm oil, and imports increased markedly in October, boosting the rise in palm oil prices. India's imports of palm oil were low in September, but demand for palm oil is expected to increase during Diwali at the end of October. In October, India increased palm oil imports in order to supplement domestic inventories. According to market estimates, India's palm oil imports may reach 0.84 million tons in October, an increase of 59% over the previous month. The cumulative import volume from January to October was 7.25 million tons, a year-on-year decrease of 0.29 million tons, a decrease of 3.85%.
Under the production reduction cycle of horse brown, exports and domestic demand both showed significant increases in October, leading to a decline in inventories that exceeded expectations and boosted the palm oil market. By the end of October, Malaysia's palm oil inventory was 1.8846 million tons, down 6.32% from the previous month. Previously, Reuters expected horse palm stocks to drop 4.64% to 1.92 million tons. Since consumption in Malaysia was far below normal in September, this month's consumption rebounded slightly from the previous month. Consumption increased 36.64% month-on-month to 0.2104 million tons in October, but fell 44.60% year on year, and is still at a low level during the year. Overall, the supply and demand for brown brown continued to tighten in October, and inventories were at their lowest level in the same period in the past three years.
Looking ahead to the November market, on the supply side, palm oil entered a seasonal production reduction cycle in November, and production may maintain a downward trend. According to historical production data for the past ten years, the average decline in horse brown production in November was about 9%, and the decline in production is expected to expand month-on-month. According to SPPOMA data, horse brown production decreased by 3.49% in the first 10 days of November.
In terms of exports, horse brown exports are expected to decline in November. Currently, international palm oil prices continue to rise. As a result, the price spread of soybean and palm oil is seriously inverted, palm oil import profits are being compressed, and demand for palm oil from major importers has decreased. Furthermore, India's Diwali demand peak has ended, and there is no obvious demand for stock replenishment in the short term, plus rupeesexchange rateContinued decline in import costs may cause import costs to weaken; at the same time, attention should be paid to the negative impact of the recovery in Indonesian palm oil production on horse palm exports. According to ITS data, Ma Brown's exports are expected to drop 15.8% in the first 10 days of November. However, the ringgit exchange rate remains low in expectations, compounded by the fact that the current price spread between Malaysia and India is at a low level, and there is also some support for Malaysian brown exports.
In summary, Malaysia's palm oil production and exports may have declined in November. The expected decline in supply is greater than the decline in demand. Ma palm maintains seasonal declines in stocks, boosts profits on the supply and demand side, and there is support for palm oil prices.
(Author: Xuan Dongshuang,Zhuochuang NewsAnalyst)
Editor: Wu Zheng Si
Among them, India is the largest importer of palm oil, and imports increased markedly in October, boosting the rise in palm oil prices. India's imports of palm oil were low in September, but demand for palm oil is expected to increase during Diwali at the end of October. In October, India increased palm oil imports in order to supplement domestic inventories. According to market estimates, India's palm oil imports may reach 0.84 million tons in October, an increase of 59% over the previous month. The cumulative import volume from January to October was 7.25 million tons, a year-on-year decrease of 0.29 million tons, a decrease of 3.85%.
Under the production reduction cycle of horse brown, exports and domestic demand both showed significant increases in October, leading to a decline in inventories that exceeded expectations and boosted the palm oil market. By the end of October, Malaysia's palm oil inventory was 1.8846 million tons, down 6.32% from the previous month. Previously, Reuters expected horse palm stocks to drop 4.64% to 1.92 million tons. Since consumption in Malaysia was far below normal in September, this month's consumption rebounded slightly from the previous month. Consumption increased 36.64% month-on-month to 0.2104 million tons in October, but fell 44.60% year on year, and is still at a low level during the year. Overall, the supply and demand for brown brown continued to tighten in October, and inventories were at their lowest level in the same period in the past three years.
Looking ahead to the November market, on the supply side, palm oil entered a seasonal production reduction cycle in November, and production may maintain a downward trend. According to historical production data for the past ten years, the average decline in horse brown production in November was about 9%, and the decline in production is expected to expand month-on-month. According to SPPOMA data, horse brown production decreased by 3.49% in the first 10 days of November.
In terms of exports, horse brown exports are expected to decline in November. Currently, international palm oil prices continue to rise. As a result, the price spread of soybean and palm oil is seriously inverted, palm oil import profits are being compressed, and demand for palm oil from major importers has decreased. Furthermore, India's Diwali demand peak has ended, and there is no obvious demand for stock replenishment in the short term, plus rupeesexchange rateContinued decline in import costs may cause import costs to weaken; at the same time, attention should be paid to the negative impact of the recovery in Indonesian palm oil production on horse palm exports. According to ITS data, Ma Brown's exports are expected to drop 15.8% in the first 10 days of November. However, the ringgit exchange rate remains low in expectations, compounded by the fact that the current price spread between Malaysia and India is at a low level, and there is also some support for Malaysian brown exports.
In summary, Malaysia's palm oil production and exports may have declined in November. The expected decline in supply is greater than the decline in demand. Ma palm maintains seasonal declines in stocks, boosts profits on the supply and demand side, and there is support for palm oil prices.
(Author: Xuan Dongshuang,Zhuochuang NewsAnalyst)
Editor: Wu Zheng Si
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