Poll: Malaysia palm oil stocks to hit new peak

PALM oil stocks in Malaysia probably climbed 4.5 per cent in November to hit a record 2.18 million tonnes as slowing export growth outpaced production cuts, a Reuters poll showed yesterday.

Output in the world's second biggest producer of the vegetable oil, used in biofuel, food and cosmetics, slipped 3.2 per cent in November, the median forecast of five plantation houses showed.

Poll respondents said production was trailing off after peaking in October at 1.65 million tonnes, due to a gradual slowdown in the production cycle and heavy rainfall that disrupted harvesting.

Shipments of palm oil - mostly to China, India and the European Union - inched up 4.8 per cent, continuing a trend of weak growth in the wake of a deepening global economic crisis.

November's palm reserves probably reached their highest in the 25 years since industry regulator the Malaysian Palm Oil Board (MPOB) started compiling data. MPOB will unveil data on November's palm oil exports, production and exports today.

"Stocks are not about to come off the peaks as exports are just only recovering from an extremely low base and production is still up there, despite the easing," one poll respondent said.

Industry analyst James Fry of LMC International said November palm oil inventories are likely to show an increase to 2.2 million tonnes. Bulging stockpiles have compelled Malaysia to try to convince independent power producers to consider palm oil as fuel and sell palm-based biofuels at domestic pumps by 2010.

Plantation officials say the rainy season in December could aid government efforts to mop up excess supply, especially if rains and floods are heavy enough to prevent harvesting and affect yield quality. - Reuters