Palm Oil Products Update

An Expert's View about Agriculture and Animal Husbandry in Malaysia

Last updated: 27 Sep 2011

Malaysia's crude palm oil (CPO) production dropped a marginal one percent to 1.75 million tons in July 2011. CPO output is now forecast at 18.3 million tons for 2010/11.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 9/2/2011 GAIN Report Number: MY1009 Malaysia Oilseeds and Products Update August 2011 Approved By: Chris Rittgers Prepared By: Raymond Hoh Report Highlights: Malaysia's crude palm oil (CPO) production dropped a marginal one percent to 1.75 million tons in July 2011. CPO output is now forecast at 18.3 million tons for 2010/11. CPO exports rose 9.4 percent to 1.7 million tons in July. The strong exports reduced stocks through the end of July. The monthly average delivered CPO price rose to USD1,049/ton in August. Post: Kuala Lumpur Executive Summary: Production The Malaysian Palm Oil Board (MPOB) reported that total crude palm oil (CPO) production dropped marginally to 1.75 million tons in July 2011. Peninsular Malaysia?s production rose one percent while East Malaysia?s output was down 1.4 percent. Compared to July 2010, output during July 2011 was 15 percent higher. Some disruptions in harvesting likely occurred as Malaysia celebrated the end of Ramadan during the last week of August. However, the bigger volume of fruit bunches offset lower oil yield caused by any earlier harvesting or delay in harvesting. CPO output is forecast to be about 5.4 million tons during the Jul-Sep quarter, bringing total output for 2010/11 (Oct/Sep) to 18.3 million tons. Price The monthly average delivered CPO price rose to $1,049/ton in August. For comparison, the average CPO price for August 2010 was $914/ton. Currently, the key determinant of CPO price movement is the declining stock level. Refined/Bleached/Deodorized (RBD) Palm Oil FOB average price rose from $1,107/ton in July to $1,123/ton in August. Stocks Strong demand from overseas reduced stocks through July. However, compared to July 2010, the stock level is still 590,000 higher. With outlook for exports looking bright in the near term, the stock level is expected to decline to 18.6 million tons by the end of September. Trade A preliminary official report shows PO exports rose 9.4 percent to 1.7 million tons in July. Exchange Rate: Exchange Rate: RM2.967 (Jul 31, 2011); RM2.979 (Aug 29, 2011) Other Relevant Reports Oilseeds & Products Annual 2011 (AGR Number MY1004) Biofuel Annual 2011 (AGR Number MY1006) Author Defined: Annual Situation The palms are recovering very strongly from the biological stress during the latter half of 2010/2011. The eastern states of Sabah and Sarawak experienced the strongest growth, showing a 29 percent year- to-year increase during the April-June quarter and expected to experience another 20 percent year-to- year growth in the July-September quarter. Despite the strong increase in CPO output, strong overseas demand is expected to put a lid on stock level at the end of 2010/2011. Revised Prelim Forecast 2009/10 2010/11 2011/12 (1,000 MT) Beg Stock 1,579 1,708 1,860 Production 17,765 18,300 18,500 Imports 1,115 1,315 1,400 Total Supply 20,459 21,323 21,760 Exports 16,604 17,400 17,360 Domestic Use 2,147 2,063 2,500 Ending Stock 1,708 1,860 1,900 Quarterly Production for Palm Oil 2010 1/ 2011 2010 1/ 2011 2/ Apr-Jun Apr-Jun Jul-Sep Jul-Sep Beg Stocks 3/ 1,656 1,614 1,451 2,053 Prod- Pen. Mal 2,359 2,761 2,675 2,955 - East Mal 1,753 2,264 2,014 2,415 - Total 4,112 5,025 4,689 5,370 Imports 277 278 272 270 Total Supply 6,045 6,917 6,412 7,693 Exports 4/ 4,112 4,328 4,150 5,230 Dom Disap 5/ 482 536 554 603 End Stocks 1,451 2,053 1,708 1,860 1/ Revised; 2/ Forecast; 3/ Stocks include crude and refined for all Malaysia; 4/ Exports exclude shipments of fatty acid oil distillate and all intra-Malaysia trade; 5/ Residual Production 2010 2010 2011 2011 Jul Jan-Jul Jul Jan-Jul (1000 MT) CPO: Pen. Malaysia 905 5,380 965 5,689 East Malaysia 614 4,116 786 4,656 - Total /1 1,519 9,496 1,751 10,345 Palm Kernel: 389 2,404 425 2,580 Malaysia Palm Kernel Oil: 179 1,127 203 1,169 Malaysia Palm 197 1,251 226 1,302 Kernel Meal: Malaysia 1/ Revised Prices Local Crude RBD Palm Oil RBD Olein RBD Stearin RM/MT US$/MT US$/MT US$/MT Aug 2010 2,724 890 901 837 Sep 2,729 904 913 867 Oct 2,856 944 980 940 Nov 3,259 1,073 1,090 1,051 Dec 3,630 1,180 1,173 1,124 Jan 2011 3,772 1,245 1,249 1,124 Feb 3,819 1,285 1,297 1,255 Mar 3,504 1,212 1,212 1,154 Apr 3,378 1,169 1,169 1,124 May 3,382 1,190 1,200 1,113 Jun 3,290 1,174 1,171 1,078 Jul 3,091 1,107 1,122 947 Aug (till 25) 3,126 1,123 1,150 884 1/ Prices are for West Malaysia only (since January 2006), 2/ Revised Exchange Rate: Exchange Rate: RM2.967 (Jul 31, 2011); RM2.979 (Aug 29, 2011) Stocks 2010 2011 2011 2011 Jul May 1/ Jun 1/ Jul (1,000 MT) Crude P. Oil 739 1,078 1,093 1,089 Processed PO 670 845 961 907 - Total PO 1,409 1,923 2,053 1,996 Palm Kernel 112 159 157 141 P. Kernel Oil 203 249 270 264 1/ Revised
Posted: 27 September 2011, last updated 27 September 2011

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