KUALA LUMPUR: Palm oil inventories in Malaysia grew at a slower pace than anticipated in May as production in the world’s second-largest supplier lagged and domestic consumption surged.
Stockpiles edged up only 1.5% from a month earlier to 1.57 million tonnes, according to the Malaysian Palm Oil Board (MPOB) yesterday, less than the 1.63 million tonnes forecast in a Bloomberg survey.
That’s the third monthly increase and the highest level since October.
Crude palm oil production advanced 2.8% to 1.57 million tonnes, also the highest since October, versus an estimate for 1.56 million tonnes. That represents a marked slowing from growth of 7% in April and 28% in March, and prevented a bigger build up in inventories.
Exports posted a surprise 6% drop to 1.27 million tonnes, compared with an estimate of 1.35 million tonnes.
Many analysts pegged the end-stocks higher, so the actual May figures caught many by surprise, according to Paramalingam Supramaniam, director at Selangor-based broker Pelindung Bestari.
The MPOB report, released after the midday break, showed imports fell 19% in May from a month earlier.
Local consumption is estimated to have climbed 96% due to Ramadan and the Eid al-Fitr festival, according to Sathia Varqa, owner of Palm Oil Analytics in Singapore.
Futures in Kuala Lumpur rose as much as 1.5% to RM3, 930 a tonne in the morning session. The bullish MPOB report may give a boost to prices, with market participants now closely watching production and exports in June.“The lack of manpower in Malaysian estates is manifesting itself and the production levels attest to that, ” Paramalingam said.
“Exports will be the key – the first 10 days shipments will be lower mainly due to space and freight constraint.” — Bloomberg