STOCKPILES FALL IN JANUARY
MPOB data shows inventories fall 6.7pc to 3.001m tonnes, the first decline in 8 months
MALAYSIA’S palm oil inventories in January eased back from a near two-decade high at end-December as demand increased amid falling production, official data showed yesterday, although the stocks still hovered just above three million tonnes.
January stocks in Malaysia, the world’s second-largest palm oil producer and exporter, declined for the first time in eight months, falling 6.7 per cent to 3.001 million tonnes, data from the Malaysian Palm Oil Board showed.
December’s mark at 3.22 million tonnes was the highest ever in data going back 20 years.
Declines in the stockpiles could help boost benchmark palm oil prices, which had already edged up last month from three-year lows touched at end of last year.
Palm oil was down 0.7 per cent at RM2,274 a tonne at midday break yesterday.
The inventory fall was attributed to a sharper-than-expected jump in exports, said traders.
The MPOB data showed exports jumping to 1.68 million tonnes last month, up 21.2 per cent from December.
The levels are their strongest since August 2016.
“Major destination markets picked up the pace in demand. For example, demand in China rose ahead of the Lunar New Year. Demand also rose on cheaper prices,” said a trader.
He said the strong demand trend was unlikely to continue this month, given the ringgit’s strength.
The ringgit has gained 0.6 per cent against the US dollar since the start of the month, making palm oil more expensive for holders of foreign currencies.
Palm oil output last month, meanwhile, eased 3.9 per cent to 1.74 million tonnes from the previous month, falling for a third straight month to its lowest since August, although dropping at a slower pace than forecast.
Production of palm oil, used in a variety of consumer goods items from cooking oil to soap and lipstick, typically declines in the first quarter of the year.
“Production is not falling as per the expected pace,” said Anilkumar Bagani, research head for commodities at Mumbai-based broker Sunvin Group.
“Producers were delaying production for the last two months when prices were on the decline, but then started to produce more as prices recovered,” he said.
A survey had forecast palm oil’s stockpiles to fall 4.7 per cent to 3.07 million tonnes at end of last month, while production was forecast to fall 10.9 per cent to 1.61 million tonnes.
Exports were forecast to gain 12.4 per cent to 1.56 million tonnes.