- Palm oil stockpile rose 16.3% from July to 1.74 million tonnes, its highest since June last year, according to a median estimate of 10 planters, traders and analysts polled by Reuters
KUALA LUMPUR: Malaysia's palm oil inventories at the end of August jumped to its highest in over a year as production rebounded amid a steep fall in exports.
Palm oil stockpile rose 16.3% from July to 1.74 million tonnes, its highest since June last year, according to a median estimate of 10 planters, traders and analysts polled by Reuters.
Output in the world's second-biggest palm oil producer rose 11.2% to 1.7 million tonnes, peaking at a 10-month high.
"Production is seen improving in September and October following favourable weather in the previous months," said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.
Exports declined for a second consecutive month, slumping 12.3% to 1.24 million tonnes. "Exports are lower due to more favourable pricing from Indonesia export duty, but that will change for September," said Lee Toong Huang, general manager of Kwantas Oil.
Top producer Indonesia set its crude palm oil reference price higher in September, effectively raising its export tax from $93 per tonne in August to $166 per tonne.
"The key to better exports lies with Indian demand ahead of the expiry of the duty waiver ending in September," Lee said.
Top buyer India's three-month lower import tax rate for crude palm oil, which had made palm more attractive than rival soy and sunflower oil, will end on Sept. 30.
The marked increase in stockpile will spook traders into a sell-off mode, Varqa said.
"Prices are likely to be challenged to move lower from current levels as production picks up pace and stocks near 1.9- 2 million tonnes in September and October," he added.
The Malaysian Palm Oil Board will release official data on Sept. 10.