Inventories rose about 1.2% in November from a month earlier to 2.48 million tonnes. — Bloomberg
PETALING JAYA: Palm oil stockpiles in Malaysia likely expanded for a seventh straight month to the highest level since April 2019 as production in the world’s second-biggest grower outstripped its exports of the tropical oil.
Inventories rose about 1.2% in November from a month earlier to 2.48 million tonnes, according to the median of 11 estimates in a Bloomberg survey of traders, analysts and plantation executives.
That’s around 8% higher than a year ago. Crude palm oil output fell about 6.2% to 1.82 million tonnes, the survey showed, the first monthly drop since June.
Production was still bigger than November’s forecast for exports at 1.52 million tonnes – a 3.4% gain from October.
Futures in Kuala Lumpur extended declines for a third day, falling to RM3,799 a tonne at the midday break.
The outlook for higher stockpiles has added bearish sentiment to the market, said Gnanasekar Thiagarajan, the head of trading and hedging strategies at Kaleesuwari Intercontinental.
The lack of demand during winter continues to weigh on futures, he said. Palm oil tends to solidify in colder weather, prompting consumers to look for alternative cooking oils.
Malaysian palm oil futures will likely trade between RM3,650 and RM3,900 in the short term due to the current supply and demand situation, according to Marcello Cultrera, director at Singapore-based Apricus 8 Pte.
Palm oil prices may be capped in 2024, with the late arrival of El Niño probably having a minimal impact on output, and supply of other oilseeds likely rising to a record despite Brazil’s weather woes, according to Bloomberg Intelligence analyst Alvin Tai.
El Nino could may even benefit palm oil production from December to February by reducing monsoon rainfall, Tai said. —Bloomberg
