KUALA LUMPUR: Malaysia’s palm oil inventory rose 17.59% to 2.19 million tonnes in April from 1.87 million tonnes a month earlier — its highest since November — amid higher output and lower exports.

In a statement yesterday, the Malaysian Palm Oil Board (MPOB) said palm oil inventory, comprising crude palm oil (CPO) and processed palm oil, rose as CPO production increased 13.26% to 1.69 million tonnes. Palm oil exports fell 0.59% to 1.175 million tonnes. In March, palm oil inventory rose 7.03% from February, while CPO output climbed 33.3%. Palm oil exports increased 21.54%. April inventory surpassed market expectations.

Earlier, Reuters reported that the median forecast from six planters, traders and analysts suggested Malaysia’s palm oil inventories rose to 2.13 million tonnes in April.

JF Apex Securities said the burgeoning palm oil stockpile in April was due to robust CPO production in the month which was compounded by subdued palm oil exports.

“The jump in palm oil inventory to above two million tonnes is negative to CPO prices. We project palm oil inventory to continue climbing to 2.4 million tonnes in May as we estimate that robust CPO production will outweigh palm oil exports in the month,” JF Apex Securities said in a note to clients yesterday.

Average CPO price in April was RM2,160 per tonne, declining 3.6% from RM2,240 per tonne in the previous month, mainly due to the appreciation of the ringgit against the US dollar.

While CPO prices climbed from a low of RM2,070 per tonne at end-April to the current price of RM2,150 per tonne, JF Apex Securities reckoned that the euphoria could be short term as the impact of the palm export levy on biodiesel consumption would not be immediate.

“We expect CPO prices to stay sluggish in May amid the absence of positive leads,” it added, anticipating the upcoming quarterly results reporting season for planters to be unexciting as both CPO prices and CPO production fell on a yearly basis.

This article first appeared in The Edge Financial Daily, on May 12, 2015.