Palm oil stocks in Malaysia dropped to a five-month low in January due to reduced exports and production, according to a Reuters survey.
Stockpiles declined by 0.66% from December to 2.18M tonnes, according to the average estimates of 11 planters, traders and analysts polled by Reuters.
Production dropped by 14.1% to 1.39M tonnes, the lowest in nearly a year, as harvesting in the world’s second largest producer was disrupted by tropical storms and floods, the 6 February report said.
Exports dropped by 21.7% to 1.15M tonnes due to reduced shipments to largest consumers India and China, while imports increased by 8.3%, Reuters wrote.
According to analysts, demand was expected to pick up in the months following the report as buyers stocked up ahead of the Islamic holy month of Ramadan, which was expected to begin on 22 March.
With declining production and increased Ramadan demand, Malaysian palm oil stocks were expected to decline to around 1.9M tonnes by the end of the first quarter, according to Nagaraj Meda, managing director at TransGraph Consulting.
“We expect prices to stay supported above 3,600 ringgit (US$845.86)/ tonne and trade higher towards 4,500 ringgit (US$1,057.33)/tonne in the coming months,” he was quoted as saying, adding that Indonesia’s B35 biodiesel programme and South American edible oil production would remain key factors.