Malaysian palm oil stocks fall to six-month low in Feb

Malaysian palm oil stocks fell to their lowest level in six months by the end of February, as exports fell slower than usual during the month of seasonally low production.

But stocks and production were at their highest February levels in several years, as output normalises following the end of Covid-19 induced labour shortages.

Total palm oil inventories dropped to 2.12mn t at the end of last month, latest data from Malaysia’s Palm Oil Board (MPOB) show. This was 7pc below the level at the end of January and the lowest level since August last year.

But stocks were still 40pc higher from February 2022, and at their highest February volume since 2019.

Crude palm oil (CPO) production fell to its lowest volume since March at 1.25mn t, as is typical during February. But February volumes were the highest for the month since 2020, just before Covid-19 related border closures triggered a persistent labour shortage on Malaysian plantations.

February saw the eighth consecutive year-on-year increase in Malaysian CPO output, indicating that the sector’s manpower shortages are easing.

Palm oil exports dropped to 1.11mn t in February, lower by 2pc from January. But this decline was smaller than is typical from January-February, when the decline in exports usually offsets lower output during the off-season. Exports fell by 11pc on average during January-February over the past five years.

A move from the world’s largest palm oil producer Indonesia to curb exports ahead of the Eid al-Fitr holiday in April likely supported higher exports from rival supplier Malaysia.

The active third-month CPO contract on the Bursa Malaysia Exchange fell by 2pc from a day earlier to 4,117 ringgit/t ($911/t) by 5:30pm in Singapore on 10 March, likely pressured by the rising stock and output data.

Tags: Production, Malaysia, palm oil, stocks, CPO, inventories, exports, Indonesia, Crude palm oil