Malaysia end-Dec palm oil stocks seen hitting over 13-year low as output falls

KUALA LUMPUR: Malaysia's palm oil inventories likely tumbled in December to their lowest in more than 13 years, as production of the edible oil fell for a third consecutive month while exports jumped, a Reuters survey showed.

Stockpiles in the world's second-largest producer were forecast to have declined 22% from the month before to 1.22 million tonnes, the smallest since June 2007, according to a median estimate of eight planters, traders and analysts polled by Reuters.

Production likely fell 11% to 1.33 million tonnes, its lowest since February, while exports were forecast to have risen 15% to 1.5 million tonnes after a sharp decline in November.

Malaysia's benchmark crude palm oil futures rallied 18% in 2020 to trade at an average of RM2,700 a tonne, marking their second straight yearly gain, as supplies dried due to unfavourable weather while demand remained firm.

Harvesting and productivity in Malaysia's foreign workers-reliant palm plantations were hampered last year as the government barred the entry of migrant workers until the end of 2020 to curb the coronavirus outbreak.

"The market in January will observe the government's interaction on the labour moratorium and the likelihood of the re-hiring of Indonesian workers," said Marcello Cultrera, institutional sales manager and broker at Phillip Futures in Kuala Lumpur.

The Malaysian Palm Oil Board will release the official data for December on Jan. 11.

* Official stocks of 1,564,505 tonnes in November plus the above estimated output and imports yield a total December supply of 2,990,788 tonnes. Based on the median of exports and closing stocks estimate, Malaysia's domestic consumption in December was estimated to be 272,253 tonnes. - Reuters