Malaysia’s palm oil stocks are expected to drop below 2 million metric tons for the first time in six months at the end of February, with output likely to drop for a fourth consecutive month, a Reuters survey showed on Monday.
Palm oil stocks are seen falling 5.7% from end-January to 1.91 million tons, according to the median estimate of 10 traders, planters and analysts polled by Reuters MYPOMS-TPO. They last fell below the 2 million ton mark at end-August, 2023.
Crude palm oil (CPO) production in the world’s second biggest palm oil producer was seen at 1.32 million tons, a 6% month-on-month drop due to unfavourable weather at beginning of February, which also had fewer harvest days.
“In the last couple of months, the Malaysia palm oil price has held a premium over prices of soft oils at respective origins. This is…expected to keep demand weak in coming months from the major destinations such as India, China and the European Union,” said Aditya Jeripotula, a global commodity research analyst at TransGraph Consulting.
He added that demand from Middle East is likely to drop with onset of Ramadan this month.
“Stocks would drop into April with impact of holidays on production. Stocks are forecast to rise with anticipated production recovery post Ramadan,” Aditya said.
Shipments are likely to have fallen by 15.81% to 1.14 million tons in February, the survey showed, as the tight spread between palm oil and soybean oil eroded demand.
The Malaysian Palm Oil Board (MPOB) is scheduled to release its monthly data on March 11.