Malaysian palm oil inventories drop as Nov output hits 4-year low

Malaysia’s palm oil stockpiles slipped in November for a second consecutive month, as production dropped more than expected to its lowest level for the month in four years, according to the country’s industry regulator on Tuesday.

The drop in inventories could fuel the rally in benchmark futures <FCPOc3>, which are already near their highest levels in about 2-1/2 years. Malaysia, the world’s second-largest palm oil producer after Indonesia, is at the center of this trend.

Malaysia’s palm oil stocks <MYPOMS-TPO> at the end of November fell 2.6% to 1.84 million metric tons from the prior month, the Malaysian Palm Oil Board (MPOB) said.

Crude palm oil production declined 9.8% in November to 1.62 million tons, the lowest for the month since 2020, while palm oil exports plunged 14.7% to 1.49 million tons, the board said.

A Reuters survey had forecast inventories at 1.79 million tons, with output seen at 1.69 million tons and exports at 1.52 million tons.

The MPOB data for November is slightly bearish for the market, as inventories dropped lower than forecast due to a sharp drop in exports, said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.

“Palm oil is struggling to attract fresh buying from destinations markets due to its vast premium over competing soyoil,” he said.

Palm oil usually trades at a discount to soybean oil and sunflower oil, but is currently holding a premium over these competing oils.

Initial reports suggest that production would be lower even in December due to excessive rains, but exports were also low, said a New Delhi-based dealer with a global trade house.

The market is also focusing on Indonesia’s biodiesel mandate, which is kicking off from January, and could lower exports from the top producer, the dealer said.

Following is a breakdown of the MPOB figures and Reuters estimates for November (volumes in tons):

* Indicates revised figures by the Malaysian Palm Oil Board

Tags: Production, Malaysia, palm oil, stocks, futures, stockpiles, soyoil, inventories