KUALA LUMPUR: Palm oil stocks in Malaysia rose at a slower-than-expected pace in May as production from the world’s second-largest supplier lagged and domestic consumption increased.
Stocks rose only 1.5% from the previous month to 1.57 million tonnes, according to the Malaysian Palm Oil Board (MPOB) yesterday, less than the 1.63 million tonnes forecast in a survey Bloomberg.
This is the third monthly increase and the highest since October.
Crude palm oil production rose 2.8% to 1.57 million tonnes, also the highest since October, from an estimate of 1.56 million tonnes. This represents a marked slowdown from growth of 7% in April and 28% in March, and has prevented further accumulation of inventories.
Exports show a surprise drop of 6% to 1.27 million tonnes, against an estimate of 1.35 million tonnes.
Many analysts have pegged final stocks higher, so May’s actual numbers surprised many, according to Paramalingam Supramaniam, director of the Selangor-based brokerage Pelindung Bestari.
The MPOB report, released after the lunch break, showed imports fell 19% in May from the previous month.
According to Sathia Varqa, owner of Palm Oil Analytics in Singapore, local consumption has increased by 96% due to Ramadan and the Eid al-Fitr holiday.
Kuala Lumpur futures rose 1.5% to RM 3,930 per tonne in the morning session. The bullish MPOB report could give prices a boost, with market participants now closely monitoring production and exports in June. “The lack of manpower in Malaysian fields is manifesting itself and production levels bear witness to it,” Paramalingam said.
“Exports will be key – first 10 day shipments will be lower mainly due to space and freight constraints.” – Bloomberg