Malaysia’s palm oil stocks seen below 1.5 million tonnes for most of 2021
Palm oil inventories in Malaysia, the world’s second largest producer and exporter, will remain low throughout the year and continue to support high prices, the Malaysian Palm Oil Council (MPOC) said.
Output in top producers Indonesia and Malaysia fell last year due to wet weather and labour shortages, pushing Malaysia’s stockpile at the end of 2020 to a more than 13-year low of 1.27 million tonnes.
Although production is expected to rise, Malaysia’s state agency and industry body MPOC only saw a small increase in inventory as exports are expected to grow.
“We foresee the monthly stock for Malaysia would range below 1.5 million tonnes,” MPOC deputy director Faisal Iqbal said during a webinar.
“The entire mix is a classic scenario for higher crude palm oil prices in the first half of 2021, or safe to say for the most part of 2021,” he added.
Malaysia’s benchmark crude palm oil price traded at 3,635 ringgit ($899.98) a tonne on Wednesday.
MPOC pegged 2021 crude palm oil production in Malaysia to rise to 19.6 million tonnes from 19.1 million tonnes last year, while Indonesia’s production is seen rising to 45 million tonnes from 42.3 million tonnes in 2020.
MPOC projected crude palm oil exports from Malaysia to climb 10% from last year to 4.8 million tonnes, while Indonesia’s crude palm oil exports are expected to drop 10% as its new export levy structure makes Malaysia’s product more competitive.
“Looking at the average uptake of crude palm oil by the Malaysian refining industry in the range of 15.5-15.6 million tonnes, there will be a deficit of crude palm oil within Malaysia which will be met by imports,” Faisal said.
“This supply and demand scenario is likely to create low month ending stocks for much of 2021,” he added.
MPOC forecast China’s palm oil imports would grow in the first quarter of the year, and slow during the second quarter.
Total palm oil imports by the European Union is projected to reach around 4 million tonnes for the first half of 2021, MPOC said.
Source: Reuters (Reporting by Mei Mei Chu; Editing by Simon Cameron-Moore)
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