The much awaited MPOB supply-demand is finally out and is largely on expected lines. The primal fear that stocks reached record high in September has turned out to be true, which in the first place could be detrimental for the recent price recovery across global veg oil markets. From the medium term perspective also, the report has to be viewed as ‘potentially’ bearish because the peak season end only post November. The only respite which the markets could look for is the steep fall in palm oil prices that could prompt bargain hunters to stay active in the short run. The report indicates a whopping 16.6% leap (slightly above pre-report anticipation) in CPO stocks ending Sep’12 at 2.48mn tons (record high) vs. 2.12mn tons estimated in Aug’12 and almost similar stocks a year ago. The major factor that could be attributed for such a steep increment to stocks is the extra ordinary production performance as FFB (Fresh Fruit Bunches) yields soared high in September, coupled with the considerably higher carry-in from August. From the demand side, export performance was discouraging, clocking a mere 5.6% mom growth to 1.5mn tons vs. 1.43mn tons exported in Aug’12. August recorded a mom growth of 10%. On yoy basis, exports were down by 2.2%. Exports were in contrast to the estimates released by cargo surveyors which showed a 1-2% drop, but considering the prevailing high inventory levels, export has to undergo giant leaps, should the inventories be drawn down. Imports declined by 51% mom to 0.03mn tons inline with the exhaustion of festival demand and high domestic supplies. CPO production increased significantly by 21% mom to 2mn tons (record high, Oct’09 recorded 1.98mn tons output). This is primarily the result of conducive weather conditions across SE Asia as EL Nino concerns faded, paving way for better oil palm plantation yields.
Overall, while the report could be seen to neutral to bearish as the estimated SnD numbers are inline with expectations, the fact that SE Asian markets have to live with piling up inventories for a couple of more months, could bring in gradual weakness to the edible oil markets.
MPOB monthly supply-demand statistics
|(mn tons)||Sep'12||Aug'12||Sep'11||M-o-M %||Y-o-Y %|
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