Malaysia’s palm oil stocks rose to a five-month high in July as production remained above rising export demand, data from the industry regulator showed on Monday.
Rising stockpiles in the world’s second-biggest producer of the tropical oil could weigh on benchmark Malaysian futures, which hovered near a 15-week high hit last month.
Palm oil inventories rose 3.32% from the previous month to 2.63 million metric tons, the highest level since February, the Malaysian Palm Oil Board (MPOB) said.
Crude palm oil production gained 9.41% from June to 1.79 million tons, the second straight rise and the highest monthly output in seven months.
Palm oil exports surged 14.5% to 1.39 million tons, also marking a second consecutive monthly increase, the data showed.
A Reuters survey had forecast inventories at 2.61 million tons, with output seen at 1.76 million tons and exports at 1.38 million tons.
“Rising stocks are bearish, but their impact on prices may be limited as Indonesia is implementing B50, while El Nino remains a concern for production,” said Anilkumar Bagani, commodity research head at Sunvin Group.
“Sunflower oil shipments from the Black Sea region are being affected by the war. These factors could offset some of the bearish impact of higher stocks,” he added.
Meanwhile, Paramalingam Supramaniam, director of the Selangor-based brokerage Pelindung Bestari said the market will be watching whether the momentum in exports seen in July can be sustained in August.
Palm oil remains relatively attractive to India, the largest importer, Supramaniam said, where demand is expected to increase in the coming months due to the festival season.
August production could rise further from July levels, potentially lifting stocks above 2.7 million tons unless exports increase sharply, said a New Delhi-based dealer with a global trade house. – Reuters
