Malaysia’s palm oil inventories likely inched higher by the end of March as production advanced for the first time in six months, though a surge in exports kept supply tight, a Reuters survey showed on Monday.
The palm oil stockpile in the world’s second-largest producer was expected to rise 1.3% from February to 1.32 million tonnes, according to a median estimate of nine planters, traders and analysts polled by Reuters.
“However, this suggests a very tight palm oil stock level as Malaysia’s March palm oil stock level has averaged 1.97 million tonnes over the past 10 years,” Ivy Ng, regional head of plantations research at CGS-CIMB Research, said in a note.
Production, which had been shrinking since September due to wet weather conditions and a pandemic-induced labour crunch, is expected to have jumped 25% to a four-month high of 1.38 million tonnes.
Exports likely surged 25% to 1.12 million tonnes, their highest so far this year.
Demand is expected to be higher this month due to post-Ramadan restocking as well as palm oil’s stronger discount against rival soyoil and sunflower oil, said Marcello Cultrera, institutional sales manager and broker at Phillip Futures in Kuala Lumpur.
The Malaysian Palm Oil Council (MPOC) said it expects the benchmark crude palm oil price to average RM3,846 a tonne during the first half of the year and will peak at RM4,190 a tonne.
The Malaysian Palm Oil Board will release the official data on April 12.
Breakdown of March estimates (in tonnes):
* Official stocks of 1,300,808 tonnes in February plus the above estimated output and imports yield a total March supply of 2,762,808 tonnes. Based on the median of exports and closing stocks estimate, Malaysia’s domestic consumption in March is estimated to be 325,555 tonnes.
Source : The Edge Markets