BANGKOK: Malaysian palm oil stockpiles likely rose in October as production increased to its highest in a year, even as export demand surged for the edible oil, a Reuters survey showed.
Inventories during October in the world's second-largest palm oil producer are forecast to rise 2.8% from September to a seven-month high of 2.52 million tonnes, according to a median estimate of seven planters, traders and analysts polled by Reuters.
Stockpiles were largely expected to rise even as exports jumped 13.1% to 1.59 million tonnes due to higher demand from China because of a seasonal climb in output.
"The strong month-on-month exports were boosted mainly by a 48% month-on-month rise in exports to China, which more than offset the 37% month drop in exports to India," said Ivy Ng, regional head of plantations research at CIMB Investment Bank said in a research note to clients.
"The strong demand from China could be due to buying ahead of CNY festivities and lower domestic soybean oil supplies," Ng added.
Palm oil exports to India, the world's biggest edible oils exporter, fell in October due to a boycott of Malaysian palm oil by Indian buyers over critical comments by the Malaysian Prime Minister on India's actions in Kashmir. But the consumption outlook of the edible oil is still bullish because of a push to use more palm oil in biofuels by Malaysia and Indonesia.
Malaysia said last month that implementation of biofuels mandates in Malaysia and Indonesia will increase consumption of palm oil up to 1.3 million tonnes and 10 million tonnes per year, respectively.
Malaysian palm oil output likely rose in line with seasonal trends, contributing to the gain in inventories and marking a fourth straight month of production gains. The poll pegged October production at 1.88 million tonnes, up 2% from the previous month and the highest in a year. - Reuters
