Malaysian palm oil stocks likely fell for a second consecutive month in November, with the decline in production outpacing the drop in exports, a Reuters survey of seven plantation houses showed.Stocks in the world's No 2 producer of the edible oil probably dropped 6.7 percent to 1.96 million tonnes from 2.1 million tonnes in October, the survey showed, with the pace of the decline rising but staying well below double-digits thanks to strong imports.
November output tumbled 15 percent to 1.62 million tonnes from 1.9 million tonnes in October as heavy rains disrupted harvesting in some areas in the key oil palm growing regions of Pahang and Johor on mainland Malaysia.Last year's El Nino weather condition also caused more male flowers to develop at the expense of oil-yielding female flowers, which curtailed production.Exports in November dropped 11.7 percent to 1.63 million tonnes, moderating after strong demand growth in October as major buyers in Europe and China cut back on shipments ahead of the winter season, as the cold can crystallise palm oil.
November crude palm oil imports from Indonesia, the world's top producer of the vegetable oil, jumped 86.5 percent to 75,000 tonnes as the reduced Indonesian export tax and ample supply in the country lured Malaysian orders.FACTORS TO WATCH: Production could fall for a third month in December as the seasonal monsoon rains become heavier and disrupt more harvesting.More frequent floods could hamper the transport of the edible oil from estates and refineries to the ports, forcing palm oil firms to delay deliveries, which artificially tightens supply.
Stocks will come down further, although at a more modest pace, as exports in December slow down with orders winding down at year-end and the weather getting colder in northern India and China - the world's top two consumers of edible oil.
MARKET IMPACT: Benchmark Malaysian palm oil futures have been rising on expectations of a heavier monsoon season which would trigger a massive supply disruption. While heavy rains are a concern, the market is more likely to be influenced by higher crude oil prices and the deepening euro zone debt crisis.