Weaker supplies may underpin benchmark palm oil prices. — Bloomberg
KUALA LUMPUR: Palm oil production in Malaysia likely fell to an 11-month low in January as heavy rains pummelled estates, and more storms ahead could compound the problem.
Sabah and Sarawak, which witnessed severe flooding in late January, are predicted to get more rain this week, according to the Meteorological Department. Both the states are substantial palm growers, and the saturated fields have disrupted harvesting and transport in the world’s second-largest grower.
Weaker supplies may underpin benchmark palm oil prices, which have fallen more than 16% since early December on poor demand. It could be a setback for traders in top importers India and China, who were hoping that the tropical oil may stay cheaper than soybean oil, after commanding a rare premium for about four months until early January.
Output fell about 10% from a month earlier to 1.34 million tonnes in January, according to the median of eight estimates in a Bloomberg survey of plantation executives, traders and analysts.
That would be a fifth month of declines and 4.3% lower than a year earlier, the survey showed. The Malaysian Palm Oil Board will publish its official data on Monday. Continuous torrential rains in the country last month made the situation worse, especially in Sarawak, said Sathia Varqa, an analyst at Fastmarkets Palm Oil Analytics in Singapore. The state is Malaysia’s top oil palm growing region.
Malaysian inventories may fall 2.9% from a month earlier to 1.66 million tonnes in January. That would be a fourth monthly drop and the lowest since April 2023.
Exports probably slumped 14.2% to 1.15 million tonnes, the lowest since February, according to the survey. Palm oil futures traded 1.7% lower at RM4,294 a tonne as imports by India, the world’s biggest buyer, tumbled to the lowest in 11 years in January. — Bloomberg
