KUALA LUMPUR: Malaysia’s palm oil stocks rose more than expected in September to hit an eight-month high, as a sharp fall in local consumption outweighed a modest increase in exports and reduced production, the industry regulator said on Thursday.
The rise in stocks in Malaysia, the world’s second-largest producer of palm oil after neighbouring Indonesia, could limit gains in benchmark futures, which are already hovering near their highest levels in six months.
Malaysia’s palm oil stocks at the end of September rose 6.93% from the previous month to 2.01 million metric tons, the highest since January, the Malaysian Palm Oil Board (MPOB) said.
Crude palm oil production was down 3.80% in September from August to 1.82 million tons, while palm oil exports ticked up 0.93% to 1.54 million tons, it said.
A Reuters survey had forecast inventories at 1.95 million tons, output at 1.87 million tons and exports at 1.5 million tons.
The market was surprised with the 37% reduction in local consumption, which lifted stocks despite a drop in production, said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.
Palm oil falls ahead of Malaysia’s supply-demand report
Palm oil, which usually trades at a discount to rival soft oils such as soyoil and sunflower oil, has been trading at a premium for the past few weeks.
Palm oil’s price movement will be determined by October palm oil production in Malaysia and the direction of competing oils, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
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