Periodic/Sector reports
Plantation: Stocks Hit A Record As Output Peaks
Highlights
- MPOB's Sep 26 data showed a 24.5% mom rise in Malaysia's palm oil stocks to a record 3.51m tonnes, above our 3.3m-tonne estimate. Production (2.12m tonnes) set a monthly record, while exports (1.12m tonnes) fell less than cargo surveyors had implied.
- We expect stocks to peak in October-November as India restocks after its duty cut, and to ease from December as output turns seasonally lower.
- Maintain OVERWEIGHT. Sector picks: SD Guthrie (BUY/Target: RM8.30), Genting Plantations (BUY/Target: RM7.42) and KL Kepong (BUY/Target: RM28.50).
Analysis
- MPOB's Sep 26 data. Palm oil inventory rose 24.5% mom to 3.51m tonnes, a sixth straight build and a record high, surpassing the 3.22m tonnes of Dec 18. The 692,000-tonne increase is the largest monthly build in MPOB's series, and the stock/usage ratio grew to 2.37x from 1.68x. Our call for stocks to test 3m tonnes by end-September proved too conservative.
- Production rose 16.5% mom to 2.12m tonnes, the highest monthly output on record (+15.0% yoy), though below the 21-25% mom rise in our survey. Sabah led (+35.0% mom), ahead of Sarawak (+15.5%) and Peninsular Malaysia (+10.9%). The national oil extraction rate increased 0.25ppt mom to 20.26%. 9M26 output of 14.75m tonnes was up 1.9% yoy.
- Exports fell 12.1% mom to 1.12m tonnes, the lowest since Apr 25, though shallower than the 17.1% mom drop in Intertek Testing Services estimates. Crude palm oil exports expanded 24.5% mom while processed palm oil declined 22.0%. Biodiesel exports dropped to 2,930 tonnes (-91.7% mom). 9M26 exports of 11.54m tonnes remained 4.6% ahead yoy.
- Imports went up 17.2% mom to 58,064 tonnes, including 6,812 tonnes of crude palm oil. Implied domestic disappearance fell 9.5% mom to 362,784 tonnes. With output below the Malaysian Palm Oil Association's estimate of about 19% growth and exports beating surveyors, weaker domestic offtake explains most of the overshoot against our stock estimate.
- Outlook. We expect stocks to peak in October-November and ease from December. India's cut in its crude palm oil duty to 11.0% from 16.5% on 24 September, and festive buying ahead of Diwali on 8 November, should support palm oil demand. ITS estimates 1-10 October exports rose 33.5% mom. Output should turn seasonally lower from November, and Malaysian Plantation and Commodities Minister Noraini Ahmad’s 19.5m-19.8m-tonne 2026 target implies only 1.58m-1.68m tonnes a month in 4Q26.
Highlights
- MPOB's Sep 26 data showed a 24.5% mom rise in Malaysia's palm oil stocks to a record 3.51m tonnes, above our 3.3m-tonne estimate. Production (2.12m tonnes) set a monthly record, while exports (1.12m tonnes) fell less than cargo surveyors had implied.
- We expect stocks to peak in October-November as India restocks after its duty cut, and to ease from December as output turns seasonally lower.
- Maintain OVERWEIGHT. Sector picks: SD Guthrie (BUY/Target: RM8.30), Genting Plantations (BUY/Target: RM7.42) and KL Kepong (BUY/Target: RM28.50).
Analysis
- MPOB's Sep 26 data. Palm oil inventory rose 24.5% mom to 3.51m tonnes, a sixth straight build and a record high, surpassing the 3.22m tonnes of Dec 18. The 692,000-tonne increase is the largest monthly build in MPOB's series, and the stock/usage ratio grew to 2.37x from 1.68x. Our call for stocks to test 3m tonnes by end-September proved too conservative.
- Production rose 16.5% mom to 2.12m tonnes, the highest monthly output on record (+15.0% yoy), though below the 21-25% mom rise in our survey. Sabah led (+35.0% mom), ahead of Sarawak (+15.5%) and Peninsular Malaysia (+10.9%). The national oil extraction rate increased 0.25ppt mom to 20.26%. 9M26 output of 14.75m tonnes was up 1.9% yoy.
- Exports fell 12.1% mom to 1.12m tonnes, the lowest since Apr 25, though shallower than the 17.1% mom drop in Intertek Testing Services estimates. Crude palm oil exports expanded 24.5% mom while processed palm oil declined 22.0%. Biodiesel exports dropped to 2,930 tonnes (-91.7% mom). 9M26 exports of 11.54m tonnes remained 4.6% ahead yoy.
- Imports went up 17.2% mom to 58,064 tonnes, including 6,812 tonnes of crude palm oil. Implied domestic disappearance fell 9.5% mom to 362,784 tonnes. With output below the Malaysian Palm Oil Association's estimate of about 19% growth and exports beating surveyors, weaker domestic offtake explains most of the overshoot against our stock estimate.
- Outlook. We expect stocks to peak in October-November and ease from December. India's cut in its crude palm oil duty to 11.0% from 16.5% on 24 September, and festive buying ahead of Diwali on 8 November, should support palm oil demand. ITS estimates 1-10 October exports rose 33.5% mom. Output should turn seasonally lower from November, and Malaysian Plantation and Commodities Minister Noraini Ahmad’s 19.5m-19.8m-tonne 2026 target implies only 1.58m-1.68m tonnes a month in 4Q26.
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