Malaysia palm exports highest since at least 2006

Palm oil exports from Malaysia, the second-ranked shipper, have continued to soar after rising last month to their highest since at least 2006, boosted by a jump in purchases by China.

Societe Generale de Surveillance, the cargo surveyor said that Malaysia’s exports of palm oil products hit 608,200 tonnes in the first 10 days of August, up 53% on the same period of July.

Separately, official data showed that July was itself the best month for Malaysian palm oil exports since at least December 2006, the last month for which data is readily available, with shipments soaring 9.1% month-on-month to 1.73m tonnes.

The figure trounced the recent high of 1.61m tonnes, set in December 2008, according to Malaysian Palm Oil Board (MPOB) data.

China buying

The rise in Malaysia’s exports has been fuelled in part by stockpiling by Muslim nations ahead of a festival period which includes Ramadan and, in September, Eid al-Fitr.

However, it also reflects higher imports from China, the world’s second-ranked buyer of palm oil after India, where a recovery in imports of vegetable oils and oilseeds is gaining ground after a run down in stocks.

Chinese soybean processors are enjoying positive margins again, while the lifting of price controls on cooking oils has improved the scope for profitable imports of vegetable oils.

SGS said that China’s palm oil imports in the first 10 days of August were, at 149,800 tonnes, up 21% month on month, and up 58% from the same period in June.

Separately, customs data showed China’s vegetable oil imports hitting 700,000 tonnes in July, up 49% month on month.

Market reaction

The MPOB figure for Malaysia’s palm oil exports in July came in more than 1m tonnes ahead of market forecasts.

However, production remained, at 1.75m tonnes, near 18-month highs, higher than traders had anticipated, seeing inventories end the month at 2.0m tonnes, in line with expectations.

"Production has shown strong year-on-year growth since March, with the past three months exceptional," Victor Thianpiriya at Australia & New Zealand Bank said.

"The seasonal peak is still to come with the risk that the growth rates are maintained, leading to rising stocks unless the market can build a sufficient price discount to other vegoils to stimulate demand."

Furthermore, with many analysts predicting a tail-off in exports as the Muslim festivals ramp up, palm oil futures struggled to capitalize on the robust export data, and closed up 0.6% at 2,937 ringgit a tonne in Kuala Lumpur, for the benchmark October lot.

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