Malaysia palm reserves seen at four-month high on low demand
04/07/2024 (The Malaysian Reserve) - PALM OIL stockpiles in Malaysia probably hit the highest level since February as exports from the world’s second-largest grower slumped. Still, expectations for better demand ahead boosted prices to a two-month high.
Reserves climbed 4% from a month earlier to 1.82 million tons in June, a third month of gains, according to the median of 13 estimates in a Bloomberg survey of plantation executives, traders and analysts.
Exports shrank about 10% to 1.24 million tons, according to the survey, the biggest decline since February. Crude palm oil production fell almost 6% to 1.60 million tons, after surging more than 13% in May.
“Exports were bad in June due to shipping problems, such as space constraints in containers,” said Paramalingam Supramaniam, director at Selangor-based broker Pelindung Bestari.
“Production, on the other hand, was lower due to aging trees and poor yields, as well as volatile weather that complicated harvesting.”
Malaysia’s overseas palm sales may be better in July as shipping problems are expected to ease, Paramalingam said.
Benchmark palm oil futures in Kuala Lumpur rose as much as 1% to 4,122 ringgit ($875) a ton Thursday, the highest since mid-April, before trading at 4,091 ringgit by the midday break.
The tropical oil recently posted its longest run of gains since January, fueled by production concerns and a weaker Malaysian currency that made the tropical oil cheaper for overseas buyers.
The Malaysian Palm Oil Board will release official monthly data on July 10.
More from the survey:
Stockpile estimates ranged between 1.71 million and 1.92 million tons, while production was seen between 1.57 million and 1.77 million tons
Export forecasts were between 1.15 million and 1.40 million tons
Imports are seen climbing to around 30,000 tons, from 20,761 tons in May
Local consumption is likely to be in the band of 250,000 tons and 380,000 tons
— BLOOMBERG / pic TMR FILE