Malaysia palm oil reserves seen at six-year high as exports slump

[KUALA LUMPUR] Palm oil stockpiles in Malaysia surged to the highest in more than six years as exports dropped in November, according to a survey.

Inventories jumped 10 per cent from a month earlier to 2.71 million tonnes, the median of 11 estimates in a poll of plantation executives, traders and analysts. That’s the highest level since April 2019 and an increase of 47 per cent from a year ago.

Palm oil reserves have been expanding since March and high stockpiles could pressure prices of the tropical oil. Futures briefly dropped below RM4,000 a tonne in November as demand from top importer India eased with the end of the festival season.

Exports dropped about 15 per cent to 1.43 million tonnes, after jumping almost 19 per cent a month earlier. The Malaysian Palm Oil Board will publish its monthly data on Dec 10.

Crude palm oil production in Malaysia, the world’s second-largest grower, eased 2.9 per cent to 1.98 million tonnes, after jumping 11 per cent in October, according to the survey.

“Peak production months are over and we are entering into the lower production months, but demand has been rather lethargic,” said Paramalingam Supramaniam, a director at brokerage Pelindung Bestari.

Market participants are looking for confirmation on the size of Malaysian stockpiles, and anything above 2.6 million tonnes would be considered bearish, Paramalingam said.

More from the survey:

• Stockpile were estimated between 2.65 million and 2.78 million tonnes, while production was seen between 1.86 million and 2.13 million tonnes.
• Export forecasts were between 1.30 million tonnes and 1.52 million tonnes.
• Imports were seen at 40,000 tonnes, compared with 36,283 tonnes in October.
• Local consumption was between 270,000 tonnes and 490,000 tonnes. BLOOMBERG