Palm Oil Gains on Optimism Stockpiles Reduced After Festivities

By Claire Leow

Oct. 5 (Bloomberg) -- Palm oil gained amid speculation that official figures will show that stockpiles in Malaysia, the second-largest supplier, fell last month after recent holidays in Asia.

“Our expectation is that there would not be any significant increases in stock levels,” said an ECM Libra Research report today. On the supply side, “the month of September, coinciding with the Eid-al Fitr festival, would have seen less harvesting,” the report said.

Eid-al Fitr is the most important Muslim holiday. The celebration sees palm oil demand increase for cooking communal meals to end the daily fast, and supplies decline as daily fasting and public holidays slow production. About 90 percent of the world’s palm oil is produced in Indonesia and Malaysia, both predominantly Muslim countries.

Palm oil for December delivery on the Malaysia Derivatives Exchange gained as much as 1 percent to 2,057 ringgit ($593) a metric ton and traded at 2,052 ringgit at 12:13 p.m. local time. The contract closed at 2,037 ringgit on Oct. 5, the lowest since July 16.

Malaysia’s palm oil output in August reached 1.49 million tons, the highest since a record set in November last year, the Malaysian Palm Oil Board said. That helped lift stockpiles to a six-month high of 1.42 million tons as exports fell. Monthly data is usually released on the 10th of the following month.

September demand also increased ahead of China’s Mid-Autumn festival, which coincided with a weeklong nationwide holiday to mark the 60th anniversary of the Communist Party’s rule.

Demand for cooking oils in China, the world’s largest consumer, typically increases during national holidays.

To contact the reporter on this story: Claire Leow in Singapore at cleow@bloomberg.net