Malaysia's end-May palm oil stocks seen rising as output hits 5-month high
06/06/2023 (Channel News Asia), Kuala Lumpur - Malaysia's palm oil inventories at the end of May are expected to rise as production swells to its highest so far this year while exports remain flat, a Reuters survey showed on Tuesday.
Stockpiles are forecast to rise 6.8 per cent from April to 1.6 million tonnes, snapping a three-month decline, according to the median estimate of nine traders and analysts polled by Reuters.
That is about 5 per cent higher than a year ago.
Production in the world's second-largest producer is seen rocketing 21 per cent to 1.45 million tonnes, the highest level since December.
Supportive weather conditions, more harvesting days and an improvement in yields compared to the previous month helped the surge in production, said Nagaraj Meda, managing director at TransGraph Consulting.
Exports are seen ticking up 0.7 per cent to 1.08 million tonnes due to tougher competition from larger rival Indonesia, which had in recent weeks lowered its export duties in a bid to raise exports.
Buyers in top importer India had cancelled expensive palm oil cargoes and replaced them with cheaper soyoil and sunflower oil, causing India's palm oil imports in May to sink to a 27-month low, dealers told Reuters.
A recent downtrend in Malaysia's benchmark crude palm oil prices, which have fallen 19 per cent so far this year, has helped improve its competitiveness against soft oils.
Analysts said shipments from Malaysia are expected to improve from June onwards due to the rising production and improving demand from major destinations.
The Malaysian Palm Oil Board (MPOB) is scheduled to release its data on June 12.
Breakdown of May estimates (in tonnes):
Range Median
Production 1,292,000-1,600,000 1,450,000
Exports 1,020,725-1,400,000 1,082,000
Imports 0-126,000 40,000
Closing stocks 1,475,500-1,752,000 1,600,000
* Official stocks of 1,497,535 tonnes in April plus the above estimated output and imports yield a total May supply of 2,987,535 tonnes. Based on the median of exports and closing stocks estimate, Malaysia's domestic consumption in May is estimated to be 305,535 tonnes.