September 8, 2014
Palm oil stockpiles in Malaysia, the world’s second biggest producer after Indonesia, climbed 16% in August to reach 1.95 million tons from 1.68 million tons in July according to data compiled by Bloomberg. This increase – the biggest since September 2012, puts inventories at their highest since December. Production increased 13% and harvesting activity is behind the double digit increase. At the same time shipments were down 4.8% from July to 1.38 million tons and sales fell to 1.29 million tons from 1.35 million the previous month. The country has eliminated taxes on palm oil exports for the months of September and October which may increase sales by 600,000 tons and help keep stockpiles at 1.6 million tons by the end of the year. Falling palm oil prices could come back up by October as record global soybean supplies begin to be absorbed and palm oil demand returns for biofuel production and users begin to rebuild reserves, although Rabobank predicts that these gains will be limited in lieu of the high global vegetable supply situation and record U.S. soybean crop.
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