KUALA LUMPUR/MUMBAI: Malaysia's palm oil stocks fell more than expected to their lowest in six months at the end of January as production plunged to the lowest level in nine months amid steady exports, the industry regulator said on Tuesday.
The reduction in stocks at the world's second-largest palm oil producer after Indonesia would help in supporting benchmark futures, which lost 10% in 2023.
Palm oil stocks at the end of January fell 11.83% from the previous month to 2.02 million metric tons, the lowest since July, data from the Malaysian Palm Oil Board (MPOB) showed.
Crude palm oil production declined 9.59% from December to 1.40 million tons in January, the lowest since April, while exports dropped 0.85% to 1.35 million tons, MPOB said.
A Reuters survey forecast January's inventories at 2.14 million tons, a 6.62% decline from the previous month, with output at 1.37 million tons and exports at 1.22 million tons.
The MPOB report is slightly bullish as stocks fell more than expected, but production is not declining at a rate the market has been discussing, said Anilkumar Bagani, research head of vegetable oils broker Sunvin Group.
A few traders were expecting production in January to fall as low as 1.3 million tons, but the output did not decline at the pace that the market anticipated, said a New-Delhi based trader.
Palm oil exports are expected to fall in the coming months as rival oils become available at competitive prices, offsetting the likely drop in production, the trader said.
The rebound in palm oil prices is likely to be capped by abundant supplies of rival soyoil and sunflower oil, "soft" oils that are available at discounts to tropical palm oil for the first time in more than a year, industry officials said last week.
Following is a breakdown of the MPOB figures and Reuters estimates for January (volumes in tons): - Reuters