KUALA LUMPUR: Malaysian palm oil stocks in January are expected to have edged up slightly from a two-year high in December, according to a Reuters poll, as exports likely came in below output levels.
End-stocks are expected to have risen to 2.75 million tonnes, up 0.6 percent from December levels, according to the median estimates of nine planters, traders and analysts polled by Reuters. That would make January's end-stocks the highest since November 2015.
High stocks could dampen prices for palm oil, which is largely produced in Indonesia and Malaysia, and used in a variety of products, such as chocolate, soap and cooking oil.
Benchmark palm oil futures hit a one-month low in January, down 0.4 percent on a monthly basis. On Monday, prices rose as much as 1 percent to 2,492 ringgit ($639.30) a tonne.
Poll respondents said weaker exports likely contributed to the rise in stockpiles, but inventories could be drawn down in coming months as output continues to decline seasonally.
Malaysia's January output is forecast to fall 14.9 percent to 1.56 million tonnes, which would be its lowest in seven months and the sharpest monthly drop in two years. But it would also be the strongest January output since 2013.
"Inventories will normalize to 2.4 to 2.5 million tonnes during the first quarter of the year on seasonal low production," said William Simadiputra, a plantations analyst at DBS Group.
"However, I think stockpiles can stay higher for longer on stronger output momentum for the rest of the year," he said.
While palm oil output is forecast to seasonally decline in the first quarter, annual production is expected to reach record highs in Indonesia and Malaysia this year as it fully recovers from 2017's El Nino-stunted levels.
Malaysia's palm oil exports for January likely fell 8 percent from December to 1.31 million tonnes, the poll also showed, as demand from key buyer China slowed despite the upcoming Lunar New Year.
China's biggest celebration typically supports palm demand as it is used for cooking purposes during festivities, but large supplies of domestic soyoil and rapeseed oil has curbed Chinese import demand this year.
"Exports wise we are not seeing much surprise in store. Furthermore, Malaysian values are currently not competitive versus Indonesian values for crude palm oil and palm olein for exports," said a Singapore-based palm oil trader.
Official data will be released by the Malaysian Palm Oil Board after 0430 GMT on Feb. 12.
The median figures from the Reuters survey imply Malaysian consumption of 254,148 tonnes in January.
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