Palm oil stocks record stronger H1 revenue, profits on higher CPO prices, demand

SINGAPORE-LISTED palm oil counters enjoyed a lift in their financial results across the board amid higher crude palm oil (CPO) prices and stronger demand for their products.

Year to date, palm oil futures are up 54.1 per cent as supply from producing countries Malaysia and Indonesia came under pressure due to drier weather. Data from the Malaysian Palm Oil Board (MPOB) showed that July output hit a four-month low of 1.5 million tonnes, down 16 per cent on a year-on-year (y-o-y) basis and 5 per cent on a month-on-month (m-o-m) basis. This brings CPO output for the first seven months of 2021 to 9.9 million tonnes, down 9 per cent year on year. Malaysia's stockpile in July was also down to 1.5 million tonnes, a decline of 12 per cent y-o-y and 7 per cent m-o-m.

Fitch Solutions noted in a recent report that supply levels have been coming in "below expectations" in Malaysia in Q1 due to labour shortages that have been aggravated by the Covid-19 pandemic, which is currently keeping stocks at "multi-year lows".