Malaysia's palm oil stocks jumped to their highest level in six months in April, as production surged to a decade-high for the month while local consumption dropped, data from the industry regulator showed on Tuesday.
The rise in inventory in Malaysia, the world's second-largest palm oil producing country after Indonesia, could weigh on benchmark futures, traders said.
Malaysia's palm oil stocks increased for a second consecutive month in April, rising 19.4% from March to 1.87 million metric tons, the highest since October, the Malaysian Palm Oil Board (MPOB) said.
Crude palm oil production was up 21.5% in April from March to 1.69 million tons, the highest for the month since 2015. Palm oil exports also rose for a second straight month, rising by 9.6% to 1.1 million tons, the MPOB said.
Malaysia's palm oil consumption in April fell to 338,737 tons from 453,046 tons a month ago.
A Reuters survey had forecast inventories at 1.79 million tons, with output seen at 1.62 million tons and exports at 1.1 million tons.
"The stock buildup is bearish for palm oil, but it currently trades at a discount to competing oils. As long as this discount exists, palm oil will attract demand," said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.
The market was surprised by the strong rebound in production in April, as nobody expected it to rise above 1.65 million tons, said a Kuala Lumpur-based trader with a palm oil producing company.
"We're heading into the peak production months, so we can expect to see higher production in the coming months too," the trader said.
Following is a breakdown of the Malaysian Palm Oil Board figures and Reuters estimates for April (volumes in tons): - Reuters
