KUALA LUMPUR: Malaysia's palm oil stocks rose for a fifth consecutive month in July to their highest level in almost two years as production growth outpaced exports, data from the industry regulator showed on Monday.
The rise in inventory in the world's second-biggest producer of the tropical oil could weigh on benchmark Malaysian futures, which were trading near their highest in nearly four months.
Palm oil inventories at the end of July rose 4.02% over the month to 2.11 million metric tons, the highest since December 2023, data from the Malaysian Palm Oil Board (MPOB) showed.
Crude palm oil production was up 7.09% in July from June to 1.81 million tons, the highest since September last year, while palm oil exports increased by 3.82% to 1.31 million tons after a large fall in June, the MPOB said.
A Reuters survey had forecast Malaysian inventory at 2.25 million tons, with output seen at 1.83 million tons and exports at 1.3 million tons. Malaysian July exports were capped by aggressive selling at a discount by rival Indonesia, which wanted to ship as much as possible before a higher export duty becomes effective in August, said Tajgir Rahman, general manager, trading and procurement at IFFCO.
Exports from Malaysia will rise in August, as Indonesia's move to raise its export tax narrows the discounts that Indonesian shipments had been enjoying over Malaysian supplies, he said.
Malaysia's palm oil exports in the first ten days of August rose 23.3% compared to the first ten days of July, cargo surveyor Intertek Testing Services said on Sunday.
The rise in palm oil stocks is not burdensome for the market, as production in August is underperforming, while exports are picking up, said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group. - Reuters
