January 10, 2025 (MLN): Malaysia's palm oil stocks fell for the third consecutive month in December, hitting their lowest since May 2023, due to reduced production from floods, according to industry regulator data.
The drop in inventories in the world’s second-largest palm oil producer after Indonesia could support benchmark futures, as Reuters reported.
These futures have corrected sharply in recent weeks after reaching their highest level in about 2-1/2 years in November.
Malaysia’s palm oil stocks at the end of December fell 6.91% from a month earlier to a 19-month low of 1.71 million metric tons, the Malaysian Palm Oil Board (MPOB) data showed.
Crude palm oil production was down 8.3% to 1.49mn tons, the lowest since March 2024, while palm oil exports fell 9.97% to a six-month low of 1.34mn tons.
The MPOB data for December is slightly bullish for the market, as inventories dropped more than forecast due to a rise in local consumption, said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.
Malaysia’s palm oil consumption jumped 53% in December from a month earlier to 309,865 tons, the data showed.
Palm oil has been trading at a premium to rival soybean and sunflower oils, and it needs to be corrected to attract demand from price-sensitive buyers, said a Mumbai-based trader with a global trade house.
“Even in January, exports are likely to remain subdued,” the trader said.
