Malaysia end-Feb palm oil stocks seen up 7% as output recovers

Malaysia end-Feb palm oil stocks seen up 7% as output recovers
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KUALA LUMPUR (March 4): Malaysia's palm oil inventories at the end of February likely rose for a second straight month to touch 1.42 million tonnes, as production picked up for the first time in five months, a Reuters survey showed on Thursday.

Stockpiles in the world's second-largest producer were seen up 7% from the previous month, according to a median estimate of 10 planters, traders and analysts polled by Reuters.

Production was expected to have risen 5.8% to 1.19 million tonnes, after declining for four months in a row as La Nina weather pattern and a pandemic-induced labour shortage disrupted harvesting. 

Exports were seen ticking up 0.5% to 952,500 tonnes, recovering from a 42% plunge in the previous month. Cargo surveyors had estimated a fall between 4.6% and 8%, amid lower shipments to China and the United States. 

Demand is likely to improve ahead of the Muslim holy month of Ramadan and Eid celebration, traders said. Ramadan is expected to begin around April 12.

"We are slowly seeing a pickup in demand for both March and April. In fact, the availability of palm olein for March is very tight, especially for prompt shipment," said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

"Prices will remain firm on external and demand factors."

The Malaysian Palm Oil Board will release the official data on March 10.

Breakdown of February estimates (in tonnes):   

  Range Median
Production 1,126,000-1,500,000 1,192,113
Exports 890,551-1,300,000 952,500
Imports 0-150,000 109,000
Closing stocks 1,317,355-1,524,963 1,417,500

* Official stocks of 1,324,963 tonnes in January plus the above estimated output and imports yield a total February supply of 2,626,077 tonnes. Based on the median of exports and closing stocks estimate, Malaysia's domestic consumption in February is estimated to be 256,077 tonnes.