Malaysia end-May palm oil stocks fell as exports hit 5-month peak

Malaysia’s palm oil inventories shrank at the end of May as exports surged to a five-month peak when rival Indonesia halted shipments, although production fell less than expected, data from the Malaysian Palm Oil Board (MPOB) showed on Friday.

Stockpile at the world’s second largest producer dropped 7.37 per cent from April to 1.52 million tonnes, down for a sixth month in seven, according to MPOB.

Production, which had risen in the past two months, slipped 0.07 per cent to 1.46 million tonnes. Imports fell 33.9 per cent.

Exports jumped 26.67 per cent to 1.36 million tonnes, its highest since December, as traders turned to Malaysian palm oil after top producer Indonesia imposed an export ban that lasted for three weeks.

But the strong export pace is unlikely to maintain in June as Indonesia has since switched stance and is now gearing up to accelerate exports of at least 1 million tonnes of the edible oil.

Indonesia is making various changes to its export rules to encourage overseas shipments, including reducing overall export tax and levy.

The resumption of Indonesian supplies will put a cap on Malaysia’s exports from the second half of June onwards, making production figures the key for price action, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.

Going forward, Malaysia’ inventories would increase and put pressure on spot month contracts which are still at higher premiums, a Kuala Lumpur-based trader said.
Source: Reuters