Malaysian palm oil inventories are forecast to have grown 13% month on month to 2 million mt at the end of August, despite a small decline in CPO production during the month, Malaysia's CIMB Bank said in its latest palm oil note released late Wednesday.
A CIMB survey of 19 plantations showed that Malaysian palm oil production may have decreased 1% month on month to 1.81 million mt during August.
Cargo surveyors data from SGS and ITS showed that palm oil exports had fallen 0.4% month on month to 1.34 million mt during August, according to CIMB.
The predicted fall in palm oil exports runs counter to CIMB's earlier forecast of a rise of 2% month on month. Exports had been expected to increase ahead of the Diwali festival season in India.
The note said that the projected fall in exports may have been due to weaker demand from China, the US and EU, since these countries and regions may have stocked up on their demand in earlier months.
On the production front, the predicted month-on-month fall of 1% was lower than a historical five-year average rise of 8.8% month on month during this time. Still, CPO output in August was forecast to have risen 6% year on year, since last year was affected by the El Nino effect.
Average CPO prices remained resilient during July, falling around 2% month on month to MR2,629/mt, or $620.05/mt, despite expected higher supply of palm oil in the coming months.
The hike was primarily due to a rise in soybean oil prices and concerns within Malaysia of a shortage of foreign labour to harvest palm oil, added the note.
