Malaysia end-Jan palm oil stocks seen flat as output, exports slump
Malaysia’s palm oil stockpile at the end of January likely stayed flat, as both production and exports in the world’s second-largest producer plunged to an 11-month low, a Reuters survey showed on Monday.
Inventories in the Southeast Asian nation are forecast to tick up 0.34% from the month before to 1.59 million tonnes, according to the median estimate of eight planters, according to traders and analysts polled by Reuters.
Production is seen shrinking 10% to 1.3 million tonnes, falling for a third consecutive month to the lowest since February last year.
Exports are expected to slump 21% to 1.12 million tonnes.
“We should see stronger demand from the second half of February on key importer restocking activities and Ramadan demand,” said Marcello Cultrera, institutional sales manager and broker at Phillip Futures in Kuala Lumpur.
Malaysia’s benchmark palm oil contract FCPOc3 had hit a record 5,749 ringgit ($1,374.21) a tonne after top producer Indonesia made it mandatory for palm producers to sell a fifth of their output domestically, upending edible oil markets globally.
The price rise is likely to prompt key buyers such as India, China, Pakistan and several African countries to shift to rival soyoil and sunflower oils, which are available at a discount to palm oil for February shipments.
Over the next six months, more Indonesian market share will be taken (by Malaysia) given the ongoing uncertainties on shipments linked to Indonesia’s Domestic Market Obligation (DMO) rule, Cultrera said.
Top buyer India last week imposed limits on oilseeds and edible oils stocks that traders and processors can hold in an attempt to check hoarding and arrest rising prices.
The Malaysian Palm Oil Board will release official data on Feb. 10.
Source: Reuters (Reporting by Mei Mei Chu; Editing by Ed Davies)