By Mei Mei Chu
KUALA LUMPUR (Reuters) – Malaysia’s palm oil inventories at the end of April are forecast to drop to their lowest level in 11 months as domestic use rises amid flat production, a Reuters survey showed on Friday.
Stockpiles likely declined 9.8% from March to 1.51 million tonnes, down for a third month to hit its lowest since May 2022, according to the median estimate of nine traders and analysts polled by Reuters.
Output in the world’s second-largest producer is seen expanding 0.9% to a three-month high of 1.3 million tonnes.
Exports, which had been slow as the widely used edible oil loses its competitiveness against rival soft oils, are expected to plunge 19.3% to 1.2 million tonnes.
Unfavourable price spreads between palm and soft oils would also limit exports in May and might lead to a build-up in stocks, said Nagaraj Meda, managing director at TransGraph Consulting.
Exports from the larger producer Indonesia are expected to rise this month, after Jakarta allows more palm oil shipments to leave the country by lowering its mandatory domestic sales threshold for producers to 300,000 tonnes a month.
“With Indonesia easing the domestic market obligation policy, prices of Indonesian palm olein are trading at a steep discount of $50-60 per tonne over Malaysia, which would limit exports from Malaysia,” Meda said.
Meanwhile, Malaysia’s domestic consumption in April is estimated at 313,044 tonnes compared with about 288,697 tonnes in March.
Analysts said they will also be monitoring the Black Sea exports corridor agreement between Russia and Ukraine and impact from the El Nino weather phenomenon.
The Malaysian Palm Oil Board (MPOB) is scheduled to release its data on May 10.
Breakdown of April estimates (in tonnes):
Range Median
Production 1,160,000-1,484,000 1,300,000
Exports 1,120,000-1,649,700 1,200,000
Imports 0-88,000 50,000
Closing stocks 1,304,900-2,200,000 1,510,000
* Official stocks of 1,673,044 tonnes in March plus the above estimated output and imports yield a total April supply of 3,023,044 tonnes. Based on the median of exports and closing stocks estimate, Malaysia’s domestic consumption in April is estimated to be 313,044 tonnes.
(Editing by Kanupriya Kapoor)
