Malaysia’s April palm oil stockpiles forecast to fall to a six-month low – survey


Palm oil inventories in Malaysia, the world’s second-largest producer, are forecast to slide to their lowest in six months, as exports and domestic consumption outpaced production, according to a Reuters poll.

Malaysia’s palm oil stockpiles at the end of April are forecast to fall 4.1 percent from March to 2.23 million tonnes, a fourth straight month of declines, according to the median of nine estimates from planters, traders and analysts surveyed by Reuters. MYPOMS-TPO

Falling stocks could support benchmark palm oil futures , which have fallen since early April on slowing demand. Palm was up 0.2 percent at 2,337 ringgit ($594.35) a tonne at the midday break on Friday, and has fallen 1.9 percent so far this week.

“Production and imports were lower than exports and domestic consumption, which is expected to rise on biodiesel production,” said a Kuala Lumpur-based trader, as gains in the price of gasoil have made it more favourable to use palm oil for biodiesel production.

Palm oil is used in the production of biodiesel, which replaces some petroleum-based diesel in the fuel supply. Rising gasoil prices in recent weeks have made biodiesel more economical. Its price premium over palm widened to $52 per tonne on Friday, its highest in 3-1/2 years.

The rising domestic consumption caused palm inventories to decline despite falling exports. Exports in April are forecast to drop 5.5 percent from March to 1.48 million tonnes, according to the poll. MYPOME-PO

While key markets like China and Pakistan bought more palm oil, overall demand from top edible oils importer India fell, said Kenanga Research plantations analyst Voon Yee Ping.

“We do not expect strong Indian purchasing to continue, as increased Indian import tariffs come into full effect for the month,” Voon said.

India raised import taxes on crude and refined palm oil to their highest levels in over a decade in March to support local farmers by making domestic oilseeds more competitive.

Meanwhile, April production is forecast to remain flat at 1.57 million tonnes, following a surge in March when output for the month rose its highest since 2000. MYPOMP-CPOTT

“April will see normalizing output,” said William Simadiputra, a DBS Vickers analyst. “It will then rise a little in May, catching up on targets before the Eid-Al-Fitr festival holidays,” he said, adding that May output should rise to 1.57 million tonnes.

Official data will be released by the Malaysian Palm Oil Board after 0430 GMT on May 10.

The median figures from the Reuters survey imply Malaysian consumption of 225,685 tonnes in April.


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