Palm oil production in Malaysia, the biggest supplier after Indonesia, probably dropped the most in seven months in September after reaching a record in August. Futures climbed. Output slumped 11 per cent to 1.81 million metric tons from an all-time high of 2.03 million tons, according to the median of seven estimates from planters, analysts and traders compiled by Bloomberg. Reserves were 2.05 million tons at the end of last month, the same level as a month earlier, the survey showed. Stockpiles surged 22 per cent in August to the highest since March 2013, according to the Palm Oil Board, which is scheduled to release the latest data on 10 October.
Palm oil, used in food, cosmetics and biofuels, slumped 18 per cent this year as supplies in Southeast Asia expanded, adding to a global cooking oil glut swelled by record US soybean crops. Malaysian output climbed 8 per cent to 12.8 million tons in the first eight months from a year earlier, board data show. Output peaked in October each year in the past five years, except for 2012 when the high was in September.
“Production may have peaked earlier this year,” Ben Santoso, an analyst with DBS Vickers, said by phone from Singapore. “In September, because we’ve gone through a high base in August, and because there was some dryness and some of the fruits are not ripe yet, we are expecting the volumes to drop off. Dryness also has an immediate effect of delaying the ripening of the fruit.”
Bloomberg News edited by ESM
