Malaysia palm oil stocks see first gain in 7 months as demand tumbles
* Exports see bigger-than-expected drop, hit four-month low
* Rising stocks may weigh on prices trading near 9-month low
* The trend of higher production is expected to continue
(Adds graphic link, updates prices)
KUALA LUMPUR, July 12 (Reuters) - Malaysia's palm oil inventories rose for the first time in seven months in June, as overseas sales fell more than expected and production climbed,in what is a bearish sign for prices of the vegetable oil that are already mired near nine-month lows.
Palm oil stocks in the world's No.2 producer after Indonesia stood at 1.78 million tonnes at end-June, industry regulator Malaysian Palm Oil Board (MPOB) said on Tuesday, up 7.7 percent from May when inventories hit a more than five-year low as buyers stocked up ahead of Ramadan. (MYPOMS-TPO) June output rose 12.3 percent to 1.53 million tonnes from May, while exports fell 11.7 percent to a four-month low of 1.13 million tonnes, MPOB data showed. (MYPOMP-CPOTT) (MYPOME-PO)
A Reuters survey had forecast a 7.4 percent increase in June stockpiles, the first gain after November, a drop of 6.4 percent in exports and a rise of 11 percent in output. "Export situation is really worrisome," said one Kuala Lumpur based trader with an international trading company. "Production is climbing at a faster rate. Normally, June output is either lower than May or it is at par but more than 12 percent increase is big."
Higher output and waning export demand after Ramadan have already hurt benchmark Malaysian palm oil futures, which dropped to a low of 2,198 ringgit ($552.26) per tonne on Tuesday - the weakest since late September. The trend of higher production is expected to continue,traders said.
"June production is an indication that the output from July onwards will be higher," a second Kuala Lumpur trader said. "We are getting good rains which could be due to La Nina weather." While dryness across Southeast Asia related to an El Nino weather event that recently ended is expected to curb global palm output this year, an emergence of La Nina and resultant rains in the region could help improve fresh fruit yields.Weather forecasters globally are predicting a 50-75 percent chance of La Nina developing in the second half of 2016.Malaysian palm oil exports for July 1-10 rose 5.2 percent to 387,589 tonnes from a month ago, cargo surveyor Intertek Testing Services has said. The market is now waiting for the next update from cargo surveyors, due on July 15, for trading cues.
The following is a breakdown of Malaysian Palm Oil Boardmfigures and Reuters estimates for June:
(volumes in tonnes)
June 2016 June 2016 poll June 2015 May 2016
Output 1,532,613 1,514,162 1,763,667 1,364,575
Stocks 1,776,264 1,767,500 2,141,910 1,649,884
Exports 1,132,282 1,200,000 1,697,169 1,282,415
Imports 19,636 35,000 103,496 20,024
($1 = 3.9800 ringgit)
(Reporting by A. Ananthalakshmi and Naveen Thukral; Editing by Himani Sarkar)