Malaysia’s palm oil inventories are forecast to rise for a sixth consecutive month in August, as production continues to outpace exports despite a recovery in demand, a Reuters survey showed on Wednesday.

Palm oil stocks are expected to climb to their highest level since December 2023 at 2.2 million metric tons, up 4.06% from July, according to a median estimate of nine traders, planters, and analysts polled by Reuters.

Crude palm oil output is projected to rise for a second straight month. Output is seen at 1.86 million metric tons, a peak since August last year, and up 2.5% from July. (MYPOMP-CPOTT)

The rise in production is only a marginal improvement as output in previous years generally saw double-digit growth during this period, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

“We are not seeing (higher production) now due to the older trees and the lack of replanting,” Supramaniam said.

Exports of palm oil products are expected to climb 10.7% to 1.45 million metric tons for the second straight month, with volumes hitting a nine-month high, the survey showed. (MYPOME-PO)

“Demand is also gaining traction, which will keep palm oil prices resilient,” Supramaniam added.

Crude palm oil prices are now trading at a discount to soyoil prices after commanding a premium earlier this year.

The discount has been prompting Indian buyers to increase palm oil purchases for the upcoming festival season, said a Mumbai-based dealer with a global trade house.

The Malaysian Palm Oil Board (MPOB) is scheduled to release its monthly data on September 10.
Source: Reuters