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Malaysia’s palm oil stocks fell for the third consecutive month in December to their lowest level since May 2023 because production declined due to flooding, according to industry regulator data released on Friday.
The decline in stocks at the world’s second-largest palm oil producer after Indonesia could support benchmark futures, which have corrected sharply in recent weeks after reaching their highest levels in about two and a half years in November.
Malaysian Palm Oil Board data showed that palm oil stocks at the end of December fell by 6.91% from the previous month to a 19-month low of 1.71 million metric tonnes.
Crude palm oil production fell by 8.3% to 1.49 million tonnes, its lowest level since March 2024, while palm oil exports declined by 9.97% to a six-month low of 1.34 million tonnes.
A Reuters survey had forecast stocks at 1.76 million tonnes, production at 1.48 million tonnes, and exports at 1.38 million tonnes.
Anilkumar Bagani, head of research at Mumbai-based vegetable oil brokerage Sunvin Group, said the Malaysian Palm Oil Board’s December data was slightly positive for the market, as stocks fell more than expected due to higher domestic consumption.
The data showed Malaysian palm oil consumption rose by 53% in December compared with the previous month to 309,865 tonnes.
A Mumbai-based trader at a global trading company said palm oil is currently trading at a premium to rival soybean and sunflower oils and needs a price correction to attract demand from price-sensitive buyers.
The trader said exports are likely to remain weak even in January.
Source: Reuters