Malaysian Palm Oil : Eased to the Riggint 3,700 per tonne mark in September, approaching the 14-month low of Riggint 3,540 hit earlier in the month, pressured by high overhanging stock levels and expectations that production could pick up.
Malaysian palm oil stock climbed to their highest levels in over 30 months in August, rising 18.2% from the prior month to 2.1 million tonnes, according to the Malaysian Palm oil Board.
Bearish pressure was also contributed by lower taxes in neighboring Indonesia, as the world’s top producer seeks to clear inventories.
Countries in major producing region South East Asia seek to ramp up plantations to their limits ahead of weather risks. regarding La Nina.
Large positions by commodity traders were also limited ahead of production data for the first 20 days of September to be released later in the week.
While production growth of palm oil stalled in recent years, partly due to labour shortages during the COVID-19 pandemic, but farmers are now looking to replant or expand plantations amid rising prices.
The demand surge comes as supply for germinated sprouts, used to make seedlings, has fallen as oil palm nurseries scaled down production during the pandemic to adjust to weaker demand.
raditional growers Indonesia and Malaysia, which account for more than 80% of the global palm oil output, are focusing on replacing old oil palm trees that are cumbersome to harvest and less productive, while India and Thailand are trying to expand acreage, industry officials said.
“A number of big Malaysian estates (have decided) they want to replant, causing a shortage of availability of seedlings in the market,” said Tan Kim Tun, a Malaysian nursery operator based in the state of Johor.
Global annual palm oil production growth slowed to 0.5% between 2018 and 2022 from a 4.8% pace in the previous four years, according to data compiled by the U.S. Department of Agriculture.