Malaysia’s palm oil stocks hit 4-month high in June due to weak exports

Malaysia’s palm oil stocks rose to a four-month high in June, driven by a steeper fall in exports compared with production, the industry regulator said on Wednesday.

The rise in stocks in Malaysia, the world’s second-largest palm oil producer after Indonesia, will put pressure on futures on major stock indexes, which have fallen more than 4 percent in two days.

Malaysia’s palm oil stocks at the end of June rose 4.35% from May to 1.83 million tons, the highest since February, the Malaysian Palm Oil Board (MPOB) said.

Crude palm oil production fell 5.23% from May to 1.62 million tons, while palm oil exports fell 12.82% to 1.21 million tons. According to a Reuters survey, stocks are forecast at 1.83 million tons, production at 1.62 million tons and exports at 1.24 million tons.

“Stocks rose as expected, but the build-up is a concern. Palm oil stocks are rising even before the peak production season starts in August,” said a New Delhi-based dealer from an international trading company.

“The discount on palm oil compared to soybean and sunflower oil is small and needs to be increased to stimulate demand. Otherwise, traditional buyers may switch to competing oils.”

Tags: Malaysia, palm oil