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Official data show that palm oil stocks in Indonesia fell by 10.82% in July compared with the previous month, dropping to a five-year low of 2.51 million tonnes, as domestic biodiesel demand increased and production declined.
The decline in stocks in Indonesia, the world's largest producer and consumer of tropical oil, could support trading in Malaysia's benchmark palm oil futures contract FCPOc3, which is hovering near a two-and-a-half-month high.
The Indonesian Palm Oil Association (GAPKI) said in a statement: "The food sector consumed 5.76 million tonnes, down 5.18% from a year earlier, while 6.44 million tonnes of palm oil were used in biodiesel production, up 10.84% compared with the same period last year."
Domestic consumption in Indonesia rose 2.17% to 13.51 million tonnes over the first seven months of this year, driven by a higher biodiesel blending rate after the country fully implemented its mandatory 35% palm-based biodiesel blend, known as B35.
Palm oil shipments from Indonesia, the world's largest exporter of the commodity, fell 33.3% month-on-month to 2.24 million tonnes in July.
Source: Reuters