Malaysia’s May End Palm Oil Stocks Fall As Exports Hit 5-Month High

KUALA LUMPUR (Reuters) – Malaysia’s palm oil stocks at the end of May are expected to fall for a sixth month in seven, squeezed by lower production and as exports hit their highest level since December, a Reuters investigation revealed on Friday.

Stock in the world’s second-largest producer is expected to decline 6% from the previous month to 1.54 million tonnes, according to the median estimate of 11 planters, traders and analysts polled by Reuters.

Production likely fell 4% to a three-month low of 1.4m tonnes, due to fewer harvest days after the Eid al-Fitr holiday to mark the end of the month of Muslim fasting.

Exports are expected to jump 20% to 1.27m tonnes, the highest in five months, helped in part by a three-week export ban in rival Indonesian producer that had prompted traders to turn to the Malaysian palm oil.

Indonesia had banned exports on April 28 in a bid to secure the domestic supply of cooking oil, but has now lifted the ban and is preparing to resume shipments with a decision on domestic sales in place.

The world’s largest producer on Friday issued export permits to 21 companies for a total of 275,454 tons of palm oil products since it allowed exports to resume, said Oke Nurwan, senior responsible for the Indonesian Ministry of Commerce.

Malaysia’s exports are expected to decline in June after a strong performance last month, with increased competition from Indonesia as it re-enters the market further impacting demand, said Sathia Varqa, co-founder of Palm Oil Analytics, based in Singapore.

The Malaysian Palm Oil Board will release its data on June 10.

Breakdown of May estimates (in tons):

Median Range

Production 1,330,439-1,600,000 1,403,540

Exports 1,160,000-1,400,000 1,265,460

Imports 0-100,000 60,000

Closing inventory 1,445,454-1,802,500 1,543,000

* Official stocks of 1,641,994 tonnes in April plus production and imports estimated above give a total supply in May of 3,105,534 tonnes. Based on the median of exports and estimated ending stocks, Malaysia’s domestic consumption in May is estimated at 297,074 tonnes.

Steve R. Hansen