• Malaysian Palm Oil Board (MPOB) has released the country’s palm oil statistics for July 2015. After falling in June, palm oil inventory in Malaysia increased by 5.3% from 2.15mil tonnes in June to 2.27mil tonnes in July. This was above consensus estimates of 2.16mil tonnes for the month of July.
• The MoM rise in palm oil inventory in July 2015 was due to lower domestic disappearance, higher production and weaker exports. After being affected by the fasting season in June, palm oil production in Malaysia recovered by 2.9% in July. On the other hand, exports of palm oil inched down by 5.6% MoM to 1.6mil tonnes in July.
• Domestic disappearance of palm oil declined by 39% MoM to 99,771 tonnes in July. Domestic disappearance of palm oil has been lower than last year, as reflected in the 1.18mil tonnes recorded in 7M2015 compared with 1.47mil tonnes in 7M2014.
• Average CPO price was RM2,190/tonne in July versus RM2,265/tonne in June. Average CPO price was RM2,233/ tonne in 7M2015 against RM2,590/tonne in 7M2014. We believe that the decline in CPO prices in July was led by the selldown in commodities resulting from China’s weak economy. Average price discount between CPO and soybean oil was flat MoM at 15.5% in July. Average price discount between the two commodities was 14.4% in the past five years.
• CPO production growth in Malaysia in July was driven mainly by Peninsular Malaysia and Sarawak. The country’s palm oil production amounted to 10.9mil tonnes in 7M2015, 1.2% higher than the 10.7mil tonnes achieved in 7M2014.
• CPO output in Peninsular Malaysia rose by 5.1% MoM to 1.0mil tonnes in July while Sarawak recorded a 5.3% expansion in CPO output. CPO production in Sabah contracted by 2.7% from 489,764 tonnes in June to 476,371 tonnes in July.
• Inventory of processed palm oil in Malaysia slid by 3.8% MoM in July while inventory of crude palm oil increased by 13.9%. Inventory of crude palm oil in Peninsular Malaysia climbed by 33.6% from 544,212 tonnes in June to 727,192 tonnes in July while stockpiles in Sabah shrank by 7.8% to 366,830 tonnes. Sarawak recorded a 0.9% MoM rise in inventory of crude palm oil in July.
• Malaysia’s palm oil exports fell by 1.4% from 9.56mil tonnes in 7M2014 to 9.43mil tonnes in 7M2015. Comparing July against June, palm oil exports shrank by 5.6% to 1.6mil tonnes.
• Palm oil exports to China improved by 14.7% from 243,932 tonnes in June to 279,709 tonnes in July while India’s palm oil imports contracted by 19.3%. In the first seven months of the year, China’s imports of Malaysian palm oil eased by 7.9% YoY while India’s purchases expanded by 26.4%.
• Biodiesel exports slid from 22,670 tonnes in June to 46,601 tonnes in July. Biodiesel exports amounted to 109,878 tonnes in 7M2015 against 42,163 tonnes in 7M2014.

Source: AmeSecurities Research - 12 Aug 2015