Palm Oil Shipments From Indonesia Climb to Seven-Month High

Aug 18, 2014 3:02 am ET

(Updates price in sixth paragraph.)

Aug. 18 (Bloomberg) -- Palm oil exports from Indonesia, the world’s biggest producer, probably advanced in July to the highest level this year after India boosted purchases, helping to reduce stockpiles as output fell.

Shipments rose 0.6 percent to 1.8 million metric tons from June, according to the median of estimates from five plantation and industry executives compiled by Bloomberg. That’s 13 percent more than a year ago. Inventories probably contracted 3.8 percent to 2.02 million tons as production fell 2.7 percent to 2.14 million tons, the survey showed.

Benchmark futures in Kuala Lumpur retreated to a five-year low last week amid forecasts for record U.S. production of soybeans, which can be crushed to make an alternative oil, and lower-than-expected use of palm in biofuel. The price drop spurred Indian buyers to increase purchases. Imports by the world’s largest buyer rose 14 percent in July from a year ago, the Solvent Extractors Association of India said Aug. 13.

“A decline in prices raised expectations that demand will improve,” said Joelianto, trading director at PT Sinar Mas Agro Resources and Technology in Jakarta. Production dropped in July because of shorter working days due to the Eid al-Fitr holiday, he said in a mobile-phone text message on Aug. 14.

The Indonesian Palm Oil Association, which doesn’t publish data for output and inventories, may release the export figures for July this week. The percentage changes for production and reserves are based on previous surveys, while exports are compared with association data.

Lower Prices

Palm oil retreated as much as 0.4 percent to 2,084 ringgit ($660) a ton on Bursa Malaysia Derivatives today, the lowest level since October 2009, and was at 2,091 ringgit at 3:01 p.m. in Kuala Lumpur. The price, which lost 7 percent last month, dropped 21 percent this year.

Imports by India rose to 648,503 tons in July from a year earlier, according to the Mumbai-based Solvent Extractors Association. Shipments of other oils also climbed, with crude soybean oil imports rising 30 percent to a record 306,068 tons and sunflower oil shipments surging 80 percent to 111,936 tons.

Exports from Indonesia of 1.8 million tons last month would be the biggest since December, when they were 2.02 million tons. The country accounted for 48 percent of global exports last year, according to data from the U.S. Department of Agriculture.

Indonesian output may drop further in August as harvesting was halted for about a week this month as many people were still celebrating Eid, Derom Bangun, chairman of the Indonesian Palm Oil Board, said Aug. 8. Muslims in Indonesia celebrated Eid on July 28. Supply may improve in September and if that’s not followed by a gain in demand, prices will drop further, he said.

U.S. farmers will harvest a record 3.816 billion bushels of soybeans this year, the USDA said on Aug. 12. The price of the oilseed in Chicago retreated 19 percent this year, dropping on Aug. 14 to the lowest level since September 2010.

*T
              July 2014 (Survey)   June 2014   July 2013
Output           2.14                 2.20        2.40
Stockpiles       2.02                 2.10        2.35
Exports          1.80                 1.79        1.59
NOTE: Figures are in millions of tons
*T