KUALA LUMPUR (Nov 10): Malaysia’s palm oil inventories in October slumped to their lowest in more than three years, down 8.6% on-month, on lower production and as seasonal buying from key importer India lifted exports, according to an industry regulator on Tuesday.
Inventories in the world’s second-largest producer of palm oil stumbled to 1.57 million tonnes, their lowest since June 2017, the Malaysian Palm Oil Board (MPOB) said.
Crude palm oil production contracted 7.8% month-on-month to 1.72 million tonnes, its lowest since May, the MPOB said, hampered by wet weather conditions and labour shortage.
“Domestic consumption has also gone down due to pandemic-related demand destruction,” said Anilkumar Bagani, the research head of Mumbai-based Sunvin Group.
Meanwhile, palm oil exports rose less than expected, ticking up 3.8% to 1.67 million tonnes and up for a second month, the MPOB said.
The market will soon shift focus to November export figures, said Paramalingam Supramaniam, the director at Selangor-based brokerage Pelindung Bestari.
Cargo surveyors have flagged that shipments from Malaysia during Nov 1-10 fell between 17% and 19% from the same period last month.
MPOB data has already been priced in, but if clubbed with this month’s low shipments, it gives a bearish perspective for the palm oil market, said Bagani.
Shipments to top buyer India in November will ease after the festive season and may further hurt palm oil prospects, analysts said.
“As production is seen declining until December, the concern is on the current import margins for crude and refined palm oil in India and China, as well as domestic consumption,” said Marcello Cultrera, an institutional sales manager at Phillip Futures in Kuala Lumpur.
Source : The Edge Markets