Update 1-Malaysia End – April Palm Oil Stocks Fall to Six-Month Low – MPOB

(Agriculture.com) – Palm oil inventories in Malaysia, the world’s second-largest producer of the edible oil, eased to a six-month low at the end of April, official data showed on Friday, as exports edged up amid falling production. Benchmark palm oil prices have been range trading in recent weeks, capped by concerns of high stocks and flat demand. A fall in stockpiles could boost palm prices, which were last trading flat at 2,005 ringgit ($482.67) a tonne at the midday break on Friday.

Stockpiles at the end of April stood at 2.73 million tonnes, down 6.6% from the previous month, its second straight monthly drop, according to data from the Malaysian Palm Oil Board (MPOB). Falling production contributed to the reduction in stocks. The MPOB data showed output fell 1.4% from the previous month to 1.65 million tonnes in April. However, it is the highest for the month since 2015. April exports rose 2% from March to 1.65 million tonnes for a second month of gains.  “The strength of production has been continuing in the last few months. In the last four months we have seen about 10% increases in production compared to the same period last year,” said Sandeep Singh, director of a Kuala Lumpur-based consulting and trading firm called The Farm Trade. However, he added that the strength of production should start easing in June.

Industry participants expect Malaysian palm stocks to hover around 3 million tonnes for the rest of the year, with estimates ranging between 2.7 million to 3.4 million tonnes, as improved yields from good weather and new plantings come to fruition and exports remain flat. Meanwhile, April exports rose 2% from March to 1.65 million tonnes for a second month of gains. “April exports came in as expected, and prices should stabilize at 1,980-2,200 ringgit for the next 2 to 3 months,” said Santhosh Kumar, chief executive of Singaporean trading and consulting company Arcis Global Merchants Pte Ltd. “If so, (future) demand should be good as all key destinations have positive import margins, whether its China, India or Pakistan.” Traders expected firm demand in April because of shipments to fulfil Ramadan demand. The Muslim fasting month which began this week causes increased palm oil consumption for cooking purposes, as devotees break day-long fasts with communal feasting. A Reuters survey had forecast palm oil stockpiles in April to fall 5% from March to 2.77 million tonnes, while production was forecast to ease 1.9% to 1.64 million tonnes. Exports were expected to gain 1.6% to 1.64 million tonnes.

The following is a breakdown of the Malaysian Palm Oil Board figures and Reuters estimates for April: (volumes in tonnes) April 2019 April 2019 poll March 2019 April 2018 Output 1,649,278 1,639,714 1,671,865 1,558,769 Stocks 2,729,389 2,771,518 2,917,443 2,194,102 Exports 1,651,249 1,643,918 1,617,659 1,530,406 Imports 61,112 90,000 131,242 35,624 ($1 = 4.1540 ringgit)