Malaysia’s palm oil stocks rise 9% on lower exports in April: survey

Malaysia’s palm oil stocks are expected to reach 1.61 million tonnes at the end of April, up 9.3% from the previous month on lower exports and improved production, according to an S&P Global Commodity Insights survey from May 9.

April exports from the world’s second largest producer and exporter of palm oil are expected to be around 1.15 million tonnes, down 8.7% from 1.26 million tonnes in March, according to the median estimate of ten analysts and traders surveyed by S&P Global.

Freight experts Amspec and Intertek had previously predicted a bigger decline in exports, with April outflows set to fall 14% to 16% on the month as high prices dampened demand from major buyers in Asia and the United States. EU.

Demand from China, the world’s second largest buyer of vegetable oil, was negligible during the month due to the high price of palm oil relative to soybean oil, coupled with shutdowns in major cities that had limited the appetite for imports.

The Malaysian Palm Oil Board or MPOB will release its monthly data on May 10.

Trade sources expect Malaysia’s exports to rise in May as its biggest rival, Indonesia, announced a comprehensive ban on palm oil exports from April 28 to curb the accelerating food inflation and cooking oil shortages in the country.

Indonesia’s palm oil export ban is expected to be lifted by the end of the month, said Manoj Shukla, senior analyst at Agriworld. This could cause Malaysia’s closing stocks to fall for May, but for April it could end up being the highest in six months, Shukla added.

Jakarta said it would lift the ban when the domestic price of cooking oil drops below Rp 14,000/litre (96 cents/litre). Currently the price is around Rp 17,000/litre.
“Malaysian supply and demand data looks bearish, but now the key factor is Indonesia’s export policy.” Abdul Hameed, sales manager at Pakistan-based Manzoor Trading Co, said, adding that there were talks in the market that Jakarta could introduce a quota system for exports in the coming days.
Indonesia and Malaysia account for 85% of the world’s palm oil supply.

The S&P Global survey pegged Malaysia’s palm oil production in April at 1.48 million tonnes, down from 1.41 million tonnes in March.

“Production is expected to decline due to rains in the second half of April as well as movement of labor due to Ramadan holidays,” said Aditya Jeripotula, research manager at TransGraph Ltd, a company of commodities based in Hyderabad.

The price of local deliveries of Malaysian crude palm oil fell from MR6,251/tonne ($1,426.5) on April 1 to MR7,605.5/tonne on April 29, according to MPOB data.
Source: Platts

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Felix J. Dixon