Malaysia’s palm oil stocks hit near two-year high in August on strong output

Malaysia’s palm oil stocks rose for the sixth consecutive month in August, reaching their highest level in 20 months, as production increased while exports slipped slightly, data from the industry regulator showed on Wednesday.

Rising inventories in the world’s second-biggest producer of the tropical oil could weigh on benchmark Malaysian futures.

Malaysia’s palm oil stocks rose 4.18% in August from July to 2.2 million metric tonnes, the highest since December 2023, data from the Malaysian Palm Oil Board (MPOB) showed.

Crude palm oil production rose 2.35% last month to 1.86 million tonnes, a second straight monthly increase, while palm oil exports fell 0.29% to 1.32 million tonnes, the MPOB said. The regulator revised up its July figures for both exports and stocks.

The local consumption grew more than 6% to 490,923 tonnes in August.

The MPOB report is neutral for the market, as stocks rose as expected despite lower-than-anticipated exports, said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.

Palm oil at current price levels will struggle to attract buyers, especially since top importer India is sitting on comfortable stockpiles after higher imports in recent months, Bagani said.

Palm oil yields in Malaysia have begun to decline in September, which will help reduce stocks even if exports remain flat, said a New Delhi-based dealer with a global trade house.

“Looks like stocks hit their peak in August. Starting this month, they should begin to ease, which could give prices some support,” the dealer said.