MPOC: Malaysian palm oil stocks increase to 1.74 mln tonnes at end of April

KUCHING (May 20): Malaysian palm oil stocks increased for the first time in six months by 1.85 per cent to 1.74 million tonnes at the end of last month, driven by a robust recovery in production, said Malaysian Palm Oil Council (MPOC).

In a statement, MPOC said from January to April this year, palm oil production surged by 439,000 tonnes or 8.6 per cent, while exports experienced a modest increase of 94,000 tonnes or two per cent.

“Domestic consumption in April also slowed down to 270,000 tonnes compared to the 12-month average of 360,000 tonnes,” said MPOC in a statement today.

Looking ahead, MPOC said palm oil production and stocks are expected to gradually increase, with a more notable rise expected from August to October.

Nonetheless, palm oil stocks in Malaysia are forecasted to remain below the two million tonnes level in the second quarter of this year, said the Council.

As for exports, MPOC said demand is forecasted to remain stable, supported by the dwindling edible oil inventory in India and China.

This month, MPOC said palm oil prices are expected to remain subdued, trading between RM3,700 and RM3,950, influenced by seasonal production recovery.

It added that the anticipated supply uptick has already impacted prices, with the recent drop in palm oil prices, declining nine per cent last month, reversing gains from March.

“Compared to soft oils, palm oil experienced a more pronounced correction in April. In the European Market, palm oil prices dropped 5.5 per cent in April, while soybean oil decreased by 2.5 per cent.

“Sunflower and rapeseed oil prices, however, increased by 3.7 per cent and 8.7 per cent respectively. This shift is expected to prompt key importing countries to favour palm oil over soft oils,” said MPOC.

According to MPOC market intelligence, China’s palm oil inventory stood at 346,000 tonnes as of May 10, sufficient for 1.5 months of consumption without imports.

This signals that China’s palm oil inventory is approaching critically low levels. Additionally, data from the Solvent Extractors’ Association (SEA) of India shows that palm oil stocks at Indian ports continued to stay at a low level of 305,000 tonnes in April.

With palm oil prices currently correcting, both countries are expected to increase imports, supporting palm oil prices.

Indonesia palm oil export in the first three months of this year declined by 12 per cent or 815,000 tonnes compared to the same period last year, said MPOC.

“Although the implementation of B35 in Indonesia is forecasted to boost local consumption by 150,000 tonnes per month, poor exports may lead to an inventory accumulation, moderating prices,” said the Council.

In the soybean oil market, MPOC said several bearish factors have contributed to a negative price sentiment.

Based on National Oilseed Processor Association (Nopa) data, MPOC said soybean oil stocks in the US surged by 60 per cent from October last year to April this year, suggesting that the current soybean oil supply meets demand.

“United States Department of Agriculture (USDA) also forecast oilseed production to exceed crushing for 2024/25 marketing year, resulting in an oilseed surplus.

“Soybean, rapeseed, and sunflower seed production are projected to increase by 26 million tonnes collectively, while crushing is expected to rise by only 16 million tonnes,” said MPOC.

Despite the prevailing bearish sentiment in the soft oils market, MPOC said rapeseed and sunflower oil have achieved a price premium over palm oil.

Therefore, demand is expected to pivot back towards palm oil, especially in key markets such as India and China, it said.

“The weakness in palm oil prices in May presents a favourable opportunity for bargain hunting,” added MPOC.