Malaysia Palm Oil Stocks Highest in the Last Two Years
Malaysia’s palm oil stocks are at its peak in the last two years, climbing for the fifth straight month in July as output growth outpaced exports.
Inventories rose 4.02% from June to 2.11 million metric tonnes, while crude palm oil production increased 7.09% to 1.81 million tonnes. This is the strongest level since September last year. Exports, meanwhile, edged up 3.82% to 1.31 million tonnes after a sharp fall in June.
Concerns Over Pressure on Benchmark Futures
The increase in palm oil stocks has raised concerns of pressure on benchmark futures. Projected inventories are currently at 2.25 million tonnes, with output at 1.83 million tonnes and exports at 1.3 million tonnes.
Indonesia’s aggressive discounting limited Malaysian exports in July as it rushed to ship cargoes before a higher export duty took effect in August. With the new tax in place, Indonesia’s price advantage has narrowed, which could make Malaysian exports more competitive in the coming months.
Early August figures support this outlook. Malaysia’s exports in the first 10 days of August were 23.3% higher than in the same period in July. While palm oil stocks have risen, the situation is not expected to overwhelm the market, as August production is lagging while exports continue to pick up.
