Exports of palm oil from Malaysia — the world’s second largest producer palm oil — may dip by as much as 10% in August from July levels as high prices turned buyers away, market sources told S&P Global Platts.
“Exports from Malaysia has slowed this month as buyers are wary to cover at these high price levels which are close to all-time highs,” said Sandeep Singh, head of Kuala Lumpur-based edible oil trading firm The Farm Trade.
Singh expects Malaysia’s August exports will be 8%-10% lower than last month. Malaysia exported 1.41 million mt of palm oil in July, according to data from the government regulator MPOB on Aug. 11, down slightly from 1.42 million mt in June.
Malaysia along with larger rival Indonesia, account for 85% of the world’s palm oil production and trade.
For the period between Aug. 1- 25, Malaysian palm oil exports fell between 12.1%-12.5%, according to advance estimates of cargo surveyors Intertek and Amspec shared by sources with Platts.
Palm oil prices in Malaysia have risen to MR4,511/mt ($1,069.34) on Aug. 23 from a year-to-date low of MR3,471.5/mt ($822.92) on June 14, according to Malaysian Palm Oil Board (MPOB) data.
Prior to June, palm oil prices had touched an all-time high of MR4,773.5/mt ($1,131.56) on May 19, 2021.
Malaysia’s loss has been Indonesia’s gain in the month as some buyers turned to Indonesia which lowered its export tax, market sources said.
For August, Indonesia cut export tax on palm oil exports to $93/mt from $116/mt in July.
However, the market expects Indonesia’s export tax to be raised to $166/mt in September which has encouraged buyers to ship as much oil as they can from Indonesia in August, analysts and brokers told Platts.
“[August] Exports from Indonesia will increase sharply by about 30%-40% higher than July as all sellers are maximizing sale in August in anticipating of higher duty in September,” Farm Trade’s Singh said.
“In August Malaysia’s production is expected to rise by 8% while its exports are projected to fall by 6.5% on the month,” said Kuala Lumpur-based IcebergX Sdn Bhd trader David Ng.
Analysts expect that the slowdown in Malaysia’s exports and increase in production will raise palm oil inventories to over 1.6 million mt by end-August from 1.5 million mt in July.
Official data on Malaysia’s palm oil production, exports, and ending stocks for August will be released on Sept. 10 by the MPOB.
Source: Platts