Malaysia’s end-September palm oil stockpile expanded 1.24% from the previous month to a three-month high, as a surprisingly small advancement in output and exports squeezed supply, according to industry regulator data on Monday.
Inventories in the world’s second-largest producer rose to 1.73 million tonnes, the Malaysian Palm Oil Board (MPOB) said.
Exports rose only 1.88% on-month to 1.61 million tonnes, according to MPOB data, much lower than cargo surveyors’ estimates and a Reuters poll flagging a jump of between 6% to 11%.
“The first surprise is export is surprisingly low. Production is also lower than widely expected but stocks continue to be tight,” said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.
Crude palm oil production also hit a three-month high, despite inching up only 0.32% from August to 1.87 million tonnes.
Production may have already peaked in June and will continue to decline in the fourth quarter of the year, said Marcello Cultrera, institutional sales manager and broker at Phillip Futures in Kuala Lumpur.
“We might get tighter on a supply basis,” he added.
Palm and other vegetable oils are facing a “very bullish scenario” as traders are mindful of the La Nina weather pattern hurting yields, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari Sdn Bhd.
“This bullish scenario in palm will continue unabated at least until the first quarter of 2021,” he added.