According to insights gathered from market players, the MPOB report is not expected to bring any major surprises as most of the market aligns with the expected figures. Most of the market players surveyed by Mintec anticipate around a 14% increase in palm production in Indonesia and a 7% to 8% increase in Malaysia for July compared to June. On the other hand, exports have shown strength, with an estimated increase of 6% to 8%. India and China have been stockpiling substantial volumes ahead of holidays and festivals, leading to a minor rally in palm oil prices in Asian and European markets. However, this rally was countered by the subsequent sell-off triggered by the expected production increase.
Despite the better-than-expected exports, market players foresee an increase in ending stocks for Malaysia, projected to be around 4% to 6% higher in July compared to June. This seemingly minor increase in ending stocks has still influenced market players to approach the situation cautiously, focusing mainly on bargain buying, as noted by industry participants.
A palm oil trader shared with Mintec, "It's challenging to ignore the potential for further downside in palm prices. Production remains strong, while August exports appear to be declining significantly. If production maintains a pace above 10% for the rest of the period, ending stocks could continue to grow by the end of August, putting downward pressure on palm oil prices."
Mintec will put out an update on this story tomorrow upon the release of the MPOB report.
