KUALA LUMPUR: Malaysia's palm oil inventories slid in March, down for a third straight month and hitting a seven-month low on a surge in exports that more than offset a modest increase in output.
Falling inventories in the world's second-largest producer of the tropical oil could support benchmark Malaysian futures , which have climbed in recent weeks after the Iran conflict drove energy prices higher.
Malaysia's palm oil stocks tumbled 16.1% to 2.27 million metric tons in March from February, marking their lowest level since August, data from the Malaysian Palm Oil Board (MPOB) showed on Friday.
Inventories were slightly higher than expectations. Crude palm oil production increased 7.2% to 1.38 million tons, snapping a four-month run of declines.
Even so, that was the lowest level of output for the month of March in three years. Palm oil exports rocketed 40.7% higher to 1.55 million tons, the most in five months.
A Reuters survey had forecast inventories at 2.18 million tons, with output seen at 1.34 million tons and exports at 1.56 million tons.
"Despite the hefty reduction in March, Malaysian palm oil inventories remain well above typical levels for this time of year," said Anilkumar Bagani, research head at vegetable oil broker Sunvin Group.
"Export performance will need to be repeated in April to support the market, as production so far this month is still seen as elevated, while exports are sharply down in the first 10 days."
A recent rally in soyoil prices has widened palm oil's discount to its rival, potentially drawing Indian buyers back into the market after they stayed on the sidelines last month, said a New Delhi-based dealer with a global trade house.
India's palm oil imports fell nearly 19% in March to a three-month low, dealers said. - Reuters
