By Mei Mei Chu
KUALA LUMPUR (Reuters) – Malaysia’s palm oil inventories at the end of May are set to fall for a sixth month out of seven, squeezed by declining production and as exports surged to the highest since December, a Reuters survey showed on Friday.
The stockpile in the world’s second-largest producer is pegged to shrink 6% from the month before to 1.54 million tonnes, according to the median estimate of 11 planters, traders and analysts polled by Reuters.
Production likely slipped 4% to a three-month low of 1.4 million tonnes, due to fewer harvesting days after the Eid al-Fitr holidays to mark the end of the Muslim fasting month.
Exports are seen leaping 20% to 1.27 million tonnes, the highest in five months, partly helped by a three-week export ban in rival producer Indonesia which had prompted traders to turn to Malaysian palm oil.
Indonesia had on April 28 banned exports in a bid to secure domestic cooking oil supplies, but has now lifted the ban and is gearing up to resume shipments with a domestic sales ruling in place.
The world’s largest producer as of Friday has issued export permits to 21 companies for a total of 275,454 tonnes of palm oil products since allowing exports to resume, senior Indonesian Trade Ministry official Oke Nurwan said.
Malaysia’s exports are expected to decline in June after a strong showing last month, with increased competition from Indonesia as it re-enters the market further impacting demand, said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.
The Malaysian Palm Oil Board will release its data on June 10.
Breakdown of May estimates (in tonnes):
Range Median
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 stocks 1,445,454-1,802,500 1,543,000
* Official stocks of 1,641,994 tonnes in April plus the above estimated output and imports yield a total May supply of 3,105,534 tonnes. Based on the median of exports and closing stocks estimate, Malaysia’s domestic consumption in May is estimated to be 297,074 tonnes.
(Reporting by Mei Mei Chu; Editing by Ed Davies)
