Malaysia’s palm oil inventories at the end of June likely hit a nine-month high as production jumped, although a rebound in exports kept supply tight, a Reuters survey showed on Monday.
Stockpile in the world’s second-largest producer was seen rising for a fourth straight month, up 7.5% from May-end at 1.69 million tonnes, according to the median estimate of seven planters, traders and analysts polled by Reuters.
Output likely rose 7% last month to 1.68 million tonnes, marking a fourth consecutive month of gain and hitting its highest since October last year.
Exports were seen rebounding from the previous month’s drop, jumping 10% to 1.39 million tonnes.
In July, production is expected to continue its upward trajectory although a pandemic-induced labour crunch will constrain yields, brokers and analysts said.
Demand prospects also look upbeat after India, the world’s biggest edible oil buyer, last month lifted restrictions on refined palm oil imports and lowered import taxes on both crude and refined varieties.
Top exporter Indonesia also lowered its crude palm oil export levies and taxes for July, making its vegetable oil competitive against Malaysia’s.
India will buy more of Indonesian refined palm oil products than crude products because of lower palm olein tax and levy, said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.
India typically buys more refined products from Indonesia given that it is relatively cheaper than rival Malaysia, Varqa said. India typically buys crude palm oil from Malaysia.
The Malaysian Palm Oil Board will release the official data on July 12.
* Official stocks of 1,568,943 tonnes in May plus the above estimated output and imports yield a total June supply of 3,313,943 tonnes. Based on the median of exports and closing stocks estimate, Malaysia’s domestic consumption in June is estimated to be 235,937 tonnes.
Source: Reuters (Reporting by Mei Mei Chu; Editing by Subhranshu Sahu)