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Malaysian palm oil stocks rose for a fifth consecutive month in July to their highest level in nearly two years, as production growth outpaced exports, according to Malaysian Palm Oil Board data released on Monday.
The rising inventories in the world's second-largest palm oil producer could weigh on benchmark Malaysian palm oil futures, which had been trading near a four-month high.
Malaysian Palm Oil Board (MPOB) data showed that palm oil stocks at the end of July climbed 4.02% month-on-month to 2.11 million tonnes, the highest level since December 2023.
Crude palm oil production rose 7.09% in July from June to 1.81 million tonnes, the highest since September last year, while palm oil exports increased 3.82% to 1.31 million tonnes following the sharp drop recorded in June, the board said.
A Reuters survey had forecast stocks at 2.25 million tonnes, with production at 1.83 million tonnes and exports at 1.3 million tonnes.
Thiagarajan Nadason, general manager for trading and procurement at IFFCO, said Malaysia's exports in July were hit by aggressive discounted selling from rival Indonesia, which sought to ship as much as possible before higher export levies took effect in August.
He added that Malaysia's exports would rise in August, as the price gap that had favoured Indonesian shipments over Malaysian ones narrows following the increase in Indonesia's export tax.
According to independent inspection firm Intertek Testing Services, Malaysian palm oil exports in the first ten days of August rose 23.3% compared with the same period in July.
Anilkumar Bagani, head of research at Indian vegetable oil brokerage Sunvin Group, said the higher stocks were not a burden on the market, as August production is running below expectations while exports are improving.
Source: Reuters