05/09/2022 (The Edge Markets), Kuala Lumpur - Palm oil stockpiles in Malaysia probably jumped past two million tonnes for the first time in more than two years, as production accelerated and stiffer competition from rival Indonesia curbed export demand.

Inventories climbed 15.8% in August from a month earlier to 2.05 million tonnes, according to the median of 10 estimates in a Bloomberg survey of analysts, traders and plantation executives.

That would be first time stockpiles breached two million tonnes since May 2020 and would be the highest since November 2019.  Expanding stockpiles could further damp palm oil prices, which have tumbled more than 40% since May, as the world’s top producer Indonesia implemented various policies to boost its own shipments including an export levy waiver that has since been extended to end-October.

Besides losing market share to rival Indonesia, output is also rising in Malaysia during a peak production season.

Production in the second-biggest grower rose 8.3% to 1.70 million tonnes, the highest since October, the survey shows. Exports were seen at 1.32 million tonnes, flat from the previous month.

Palm oil production will likely continue rising to hit a peak in September, before declining through the last quarter of the year, according to Nagaraj Meda, managing director of Hyderabad-based TransGraph Consulting Pvt Ltd.

“With healthy supply, stocks are expected to increase in the months further to nearly 2.40 [million] to 2.50 million tonnes, which would limit the upside in the prices,” Meda said. Palm oil futures fell 0.1% to RM3,912 (US$871) a tonne on Monday.

More details from the survey:

•   Stockpile estimates range from 1.83 million tonnes to 2.13 million tonnes, while production ranged from 1.65 million tonnes to 1.81 million tonnes.
•  Export forecasts are from 1.24 million tonnes to 1.38 million tonnes.
• Imports might rise to around 150,000 tonnes, from 130,615 tonnes in July.
•  Local consumption estimates range from 220,000 tonnes to 300,000 tonnes.

NOTE: August 2022 numbers, in million tonnes, are based on the median of 10 estimates. The Malaysian Palm Oil Board (MPOB) will release official stockpiles, production and export data on Sept 12.

https://www.theedgemarkets.com/article/malaysias-palm-oil-reserves-may-jump-near-threeyear-high