KUALA LUMPUR: Malaysia’s palm oil stocks jumped to their highest in 18 months in June, as an unexpected drop in exports outweighed the slump in production and a spike in domestic consumption, data from the industry regulator showed yesterday.
The rise in inventories in the world’s second-biggest producer of tropical oil could weigh on benchmark Malaysian futures, which were trading near their highest in nearly three months.
Palm oil inventories at the end of June rose 2.41% month-on-month, the fourth consecutive monthly increase, to 2.03 million tonnes, the highest since December 2023, data from the Malaysian Palm Oil Board (MPOB) showed.
Palm oil exports plunged 10.52% to 1.26 million tonnes, while crude palm oil production fell for the first time in four months in June, dropping 4.48% from May to 1.69 million tonnes, MPOB said.
Domestic palm oil consumption last month jumped 44% from May to 455,150 tonnes.
A Reuters survey had forecast June inventories at 1.99 million tonnes, with output seen at 1.7 million tonnes and exports at 1.45 million tonnes.
The MPOB report is slightly bearish for palm oil, as the market wasn’t expecting a big drop in exports, which lifted stock levels above two million tonnes, said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.
A few cargoes loaded in June might actually get dispatched in July because of port congestion in India and as Malaysia has lowered the export duty for July shipments, said a New Delhi-based dealer with a global trade house.
Malaysia has lowered its July crude palm oil reference price, a change that brought down the export duty to 8.5% from 9.5% in June.
“We could see a jump in July exports due to the roll-over of cargoes from June.
“Besides, some exporters might advance August shipments to July because of the lower export duty,” the dealer said.
Malaysia’s palm oil exports in the first 10 days of July rose 12% compared to the first 10 days of June, independent inspection company AmSpec Agri Malaysia said yesterday.
