KUALA LUMPUR: Malaysian palm oil inventories at the end of May likely jumped 9.9% from the previous month as production rose, hitting the highest level in six months despite a recovery in exports.
May stockpiles are seen at 2.25 million tonnes, rising for a third successive month amid the coronavirus outbreak, according to the median estimate of 10 planters, traders and analysts polled.
Output in the world’s second-largest producer behind Indonesia is expected to have risen 3.2% from April to 1.71 million tonnes, the highest in seven months.
An easing of coronavirus containment measures, however, should also boost exports, which were pegged to hit a five-month high in May, rising 7% from April to 1.32 million tonnes as buyers replenish depleting stockpiles, traders said.
“The economy is picking up somewhat and demand should be picking up too,” said Christopher Chai, general manager with Kwantas Corp. “We will not be expecting the same pace as before, however the sentiment is positive.”
June demand levels should be sustained by Malaysia’s crude palm oil price discount to Indonesia, palm’s competitiveness to edible oil prices and restocking in India, China and Europe, said Marcello Cultrera, institutional sales manager and broker at Phillip Futures in Kuala Lumpur.
Malaysian benchmark crude palm oil is expected to trade in the range of RM2,200 to RM2,400 per tonne in June, Ivy Ng, regional head of plantations research at CGS-CIMB Research said in a note.
Official palm oil data will be published by the Malaysian Palm Oil Board on June 10.
The median results from the survey put Malaysia’s consumption in May at 230,105 tonnes. – June 5, Reuters
