THE Malaysian Palm Oil Board (MPOB) has released the country’s palm statistics for September 2024. Palm inventory rose by 6.9% to 2mil tonnes as at end-September from 1.9mil tonnes as at end-August.
The inventory of 2mil tonnes exceeded Bloomberg consensus of 1.9mil tonnes.
“The month-on-month (MoM) rise in palm inventory in September can be attributed mainly to a 36.3% plunge in domestic consumption,” said AM Investment Bank (AMIB) in the recent sector update report.
In contrast to expectations, crude palm oil (CPO) production slipped by 3.8% MoM in September instead of going up.
AMIB think that CPO output would rise in October before declining in November due to seasonal factors.
“We think that domestic consumption of palm products declined in September as economic activities took a breather during the long weekend break in the middle of the month,” said AMIB.
Comparing nine months of 2024 (9M2024) against 9M2023, domestic consumption slid by 13.4% year-on-year (YoY) to 2.7mil tonnes in 9M2024.
Palm imports fell by 30.9% MoM to 16,369 tonnes in September even though the price differential between CPO in Malaysia and Indonesia widened.
“We estimate the price disparity to be at least RM600 per tonne in September vs. RM520 per tonne in August,” said AMIB.
Indonesia raised the CPO export tax and levy to US$142 per tonne (RM606 per tonne) in September from US$118 per tonne (RM521 per tonne) in August.
Going forward, imports may rise as the CPO export tax and levy remained high at US$141 per tonne in October.
“CPO production rose by 8.7% YoY to 14.4mil tonnes in 9M2024. We think that Malaysia’s CPO production would be 19mil tonnes in 2024E, 2.4% higher than 2023’s 18.6mil tonnes,” said AMIB.
All states in Malaysia recorded stronger output in 9M2024 except for Sabah. CPO output in Sabah slid by 4.8% YoY to 3.1mil tonnes in 9M2024 due to floods in the beginning of the year.
AMIB attributes the healthy CPO production in Peninsular Malaysia to a higher number of estate workers.
CPO production in Pahang soared by 26.6% YoY in 9M2024 while in Johor, CPO output surged by 16.9%.
Palm exports edged up by 0.9% MoM to 1.5mil tonnes in September after falling by 9.5% in August.
According to Intertek, Malaysia’s palm shipments to China jumped by 28.7% MoM in September while exports to the EU rose by 28.1%.
On the flip side, shipments to India inched down by 1.9% partly due to the hike in import duties.
“We believe that EU’s palm demand would remain healthy ahead of the implementation of the EUDR (EU Deforestation Regulation) in December 2025,” said AMIB.
AMIB is NEUTRAL on the plantation sector as palm inventory may continue rising in October.
Their 2024E average CPO price assumptions are RM4,000 per tonne for pure Malaysian planters and RM3,700 per tonne for those with Indonesian operations. – Oct 11, 2024
