KUALA LUMPUR: Palm oil inventories fell a fifth straight month amid tighter production and slower demand, with January end-stocks below two million tonnes, official data showed today.
January stocks in Malaysia slumped 12.7% to 1.76 million tonnes from the previous month, lowest since June 2017, data from the Malaysian Palm Oil Board (MPOB) showed.
Inventories and output in the world’s second-largest palm oil producer have been falling since September last year due to dry weather and lower fertiliser application earlier in 2019.
January production fell 12.6% from the previous month to 1.17 million tonnes, the lowest monthly figure since February 2016, according to MPOB.
The decline in stocks and production was in line with market expectations, traders and analysts said.
“Weather had an impact mainly on the January inventories. We should follow output carefully moving forward, including the forecasting for February-March,“ said Marcello Cultrera, institutional sales manager at Phillip Futures in Kuala Lumpur.
Meanwhile, exports in January took a hit after lower purchases from top buyers India and China, with exports falling 13.2% from December to 1.21 million tonnes, the MPOB data showed.
Exports fell on India’s import curbs on refined palm oil and a political tiff that kept the South Asian nation from buying Malaysian palm oil. Additionally, the coronavirus epidemic and extended Lunar New Year holidays have disrupted demand from China, a Kuala Lumpur-based trader said.
The lack of overseas demand has been pressuring palm oil prices over the last few sessions. Today, palm oil was down more than 1% at close to RM2,770 a tonne.
Eventually, though, the tight supplies will support prices to trade higher, said Satia Varqa, co-founder of Singapore-based Palm Oil Analytics.
A Reuters survey had forecast January end-stocks to tumble around 12% to 1.76 million tonnes, while production was forecast to fall 9% to 1.21 million tonnes. Exports were forecast to fall 8.2% to 1.28 million tonnes. – Reuters
