Official data MPOB pegged higher production and higher inventory along with improved export in the month of July. Production improved by 13% from Jun’18 and palm oil stocks increased by 1.38%, whereas export enhanced by 6.7% from the previous month.
Moreover, prices also came to backwardation on weak CBOT soy oil prices which fell more 3% from last one month after USDA report.
Along with this SPPOMA 1-20th, Aug production increased 6.72% from the first 20 days of July month, However, dry weather is a constant concern in major palm producing nations as Indonesia and Malaysia facing dry spells from the past one month and rainfall was near to below average across countries.
The concern is growing for potential crop impacts later this year once El Nino expected to begin. Overall MPOB’s production & inventory is lower than market expectation in seasonal peak time and from past years trend and export is also increasing. Meanwhile, export duty on Malaysia’s CPO for September tax cut to 0% from 4.50%.