- Malaysian Palm Oil Board (MPOB) has released the country’s palm oil statistics for July 2014. Palm oil inventory in Malaysia inched up 1.5% from 1.66mil tonnes in June to 1.68mil tonnes in July.

- The rise in palm oil inventory in July was due to an improvement in production, which could not be offset by weak exports. Palm oil inventory of 1.68mil tonnes was above consensus estimates of 1.6mil tonnes for the month of July. Average inventory level in Malaysia was 1.96mil tonnes in 2013. Six-year average was 1.87mil tonnes.

- Domestic disappearance of palm oil shrank from 273,200 tonnes in June to 193,980 tonnes in July. In the seven months of the year, domestic disappearance amounted to 1.47mil tonnes against 770,000 tonnes in the same period last year.

- In spite of the fall in price, CPO is still trading at a narrow discount to soybean oil. Average price discount between soybean oil and CPO was 5.3% in July compared with 8.3% in June. Average price discount between the two commodities was 14.5% in the past five years.

- Soybean price has shrunk 15.6% from its peak this year while soybean oil price has contracted 19.3%. In comparison, CPO price has declined by 22.3% from a high of RM2,903/tonne on 10 March 2014.

- CPO production in Malaysia rose 6.1% from 1.57mil tonnes in June to 1.67mil tonnes in July. This was surprising given that workers were fasting and taking their Hari Raya break in July.

- Palm oil output in Peninsular Malaysia improved 8.0% MoM in July while CPO production in Sarawak expanded 17.8% from 245,021 tonnes in June to 288,626 tonnes in July. In Sabah, CPO output contracted 3.3% MoM to 456,410 tonnes in July.

- Inventory of palm oil in crude form climbed 7.6% from 828,378 tonnes in June to 891,636 tonnes in July while inventory of palm oil in processed form edged down by 4.7%. Inventory of crude palm oil in Peninsular Malaysia rose 18.0% MoM to 435,170 tonnes in July while Sabah recorded a 2.7% increase. In Sarawak, inventory of palm oil in crude form eased 8.5% MoM to 128,618 tonnes in July.

- Palm oil exports shrank 2.3% from 1.48mil tonnes in June to 1.45mil tonnes in July. The monthly decline in exports was due to China, which imported 30.4% fewer palm oil and USA, which received 24.5% fewer shipments.

- In the seven months of the year, palm oil exports fell by 7.1% YoY. Again, the fall in palm oil exports was dragged by China, which recorded a 18.3% decline in palm oil imports. Apart from China, palm oil exports to Pakistan declined by 45.8% YoY in 7M2014.

- According to Beijing-based Customs General Administration, China’s soybean imports grew 24.4% YoY in 1H2014.

In contrast, China’s imports of palm oil only inched up by 0.6%.

- Biodiesel exports slid from 7,725 tonnes in June to 3,610 tonnes in July. Biodiesel exports mounted to 42,163 tonnes in 7M2014, 63.2% YoY lower.

Source: AmeSecurities