Palm oil stocks in Malaysia reached their highest level in seven months in June as exports dropped following Indonesia’s return to the export market, Reuters reported on 5 July.
Stockpiles in the world’s second-largest producer are forecast to rise 12.3% from the previous month to 1.71M tonnes in June, according to the median estimate of eight traders and analysts polled by Reuters.
Production was forecast to expand by 8.3% to reach 1.58M tonnes for the month, its highest level since December, Reuters wrote.
Supply was also set to rise, but the rise in production appeared to have tapered off in Peninsular Malaysia, likely due to mills reducing palm fruit purchases, Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics, was quoted as saying.
Production at some mills had been temporarily halted during the last week of June due to unprofitable pricing following a 22% drop in the benchmark crude palm oil (CPO) contract, the report said.
Exports, which had seen an upsurge in May due to a ban on palm oil exports by top producer Indonesia, dropped by 9.9% to 1.22M tonnes after the country lifted its ban and replaced it with rules to boost shipments, Reuters wrote.
Indonesia had been forced to end the three-week export ban as it had led to rising domestic stocks and had angered farmers by lowering prices, Nasdaq quoted on 5 July from a Reuters report.
Following Indonesia’s lifting of its export ban, palm oil prices had dropped significantly although the country’s exports had not increased as initially expected, Ronny Lau, a trader with Singapore-based commodities trading company Four Bung was quoted by Reuters as saying.
Indonesia had raised its palm oil export quotas to seven times the amount producers sold at home, compared with five times previously, Reuters wrote, and was also considering increasing mandatory levels of biodiesel in fuel mixes to support prices at a time of high domestic palm oil stocks.
