KUALA LUMPUR: Palm oil inventories in Malaysia extended falls to a 13-month low at the end of August as strong export gains outpaced production increases, according to official data. Declining stockpiles in the world’s second-largest producer of the edible oil could boost benchmark prices which have retreated from a six-month top reached in end-August. Prices were last up 0.6% at RM2,214 a tonne at the midday break yesterday.
Stockpiles fell for the sixth month in a row, easing 5.3% from a month earlier to 2.25 million tonnes, the lowest since July 2018, data from the Malaysian Palm Oil Board (MPOB) showed.
Exports jumped by a bigger-than-expected 16.4% last month to 1.73 million tonnes, rising for a second straight month and marking the largest monthly gain since March, as key buyers like India snapped up purchases of the vegetable oil. Indian buyers (in August) were positioning ahead of a widely expected import duty hike on refined palm of Malaysia origin, ” said a Singapore-based palm oil trader. “The question now is how will exports shape up in the future given India will not be buying the same quantities of palm olein from Malaysia as in the past, ” he said, referring to a refined product of crude palm oil.
India, the world’s largest edible oils importer, has seen a surge in imports of refined palm oil from Malaysia so far this year following a change in Indian duties. Last week, it hiked the tax for six months to limit imports and boost local refining, raising expectations that Indian demand for Malaysian refined palm oil would fall from October onwards.
Meanwhile, production in Malaysia rose 4.6% from the previous month to 1.82 million tonnes in August, its highest since November.
“Production remains fairly strong, and going into the later part of the year production will see a seasonal peak, ” said Ivy Ng, regional head of plantations research at CIMB Investment Bank. “Indonesia is expecting production to be strongest in the fourth quarter and Malaysian output should remain around current levels. But looking at current stocks, we have a lot of room for stocks to take on higher production.”
A Reuters survey had forecast palm oil stockpiles at the end of August to fall by 7.1% to 2.22 million tonnes. Production was seen gaining 1.8% to 1.77 million tonnes, and exports were seen up 14.5% at 1.70 million tonnes. — Reuters