Inventories shrank about 18% from a month earlier to 1.75 million tonnes, according to the median of 10 estimates in a Bloomberg survey.
KUALA LUMPUR: Palm oil stockpiles in Malaysia likely plunged the most in more than two years in March, dropping below the two million-tonne level, as exports jumped and production in the second-biggest grower in the world continued to weaken.
Inventories shrank about 18% from a month earlier to 1.75 million tonnes, according to the median of 10 estimates in a Bloomberg survey of analysts, traders and plantation executives.
That’s the lowest level since June and biggest monthly drop since December 2020. Exports surged 25% to 1.39 million tonnes, the survey showed, the biggest gain since May 2022.
Crude palm oil production fell about 1% to 1.24 million tonnes, the lowest since February 2022 and the fifth straight monthly drop. The big jump in shipments showed Malaysia may have benefited from export curbs in top producer Indonesia, which in February froze some export quotas and ramped up use of palm in biofuel. Cargo surveyor Intertek Testing Services reported an increase in Malaysian shipments to India, China, European Union and Africa.
The export factor is the reason why stockpiles are down, according to David Ng, a senior trader at IcebergX Sdn Bhd here.
There’s also uncertainty about the actual impact of floods in March and how badly they affected plantationoperations, he said.
Continuous monsoon rains hit parts of Malaysia early last month, with heavy downpours triggering floods in several key-producing states such as Johor and Pahang. A group of palm oil millers in southern Peninsular Malaysia had initially forecast a 70% month-on-month slump for the first five days of March, but full-month numbers indicated a drop of just 9%.
Benchmark palm oil futures fell 2.5% to close at RM3,866 a ton in Kuala Lumpur, declining from a three-week high.
The tropical oil is pressured by long liquidation in Chicago soybean oil, easing South American soyoil, as well as sharply lower European rapeseed oil and Black Sea sunflower oil prices, said Anilkumar Bagani, head of research at Mumbai-based Sunvin Group. — Bloomberg
