Malaysia’s palm oil inventories likely dropped for the first time in four months in June as production fell unexpectedly while export demand remained robust for the tropical oil, a Reuters survey showed on Thursday.

Palm oil stocks are expected to have fallen to 1.99 million metric tons, down 0.24% from May, according to the median estimate of 11 traders, planters, and analysts polled by Reuters.

Crude palm oil output is projected at 1.7 million tons, a 4.04% decline after three months of gains.

At the beginning of June, the market was anticipating a modest growth or flat production after the rise in April and May, but yields were far lower than expected, said a New Delhi-based trader with a global trade house.

Palm oil production rose 21.5% and 5%, respectively, in April and May.
“Evidence suggests there will be robust production growth, especially during the third quarter of the year, meaning demand must remain strong for prices to maintain at current levels,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

Exports of palm oil products are forecast to have risen by 4.16% to 1.45 million tons, a fourth consecutive monthly increase. (MYPOME-PO)

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