Malaysia Palm Oil Stockpiles May Surge to Largest in Three Years
In Malaysia, Malaysia's palm oil inventories probably climbed to their biggest in nearly three years after rising production in the world's second largest grower outpaced a recovery in export demand.
The median of 10 estimates in a Bloomberg survey of analysts, traders and plantation executives showed that stockpiles jumped about 8% in September from a month earlier, to 2.26 million tons. It would be the fourth consecutive month increase, lifting reserves to their highest since October 2019.
Bulging inventories and accelerating production have overshadowed robust shipments from Malaysia, spurring the worst quarterly slump since 2008 and providing some relief for world food inflation. Even as the weak ringgit makes the oil more attractive to price sensitive buyers, mounting concerns that a global recession will curb edible oil demand are pushing futures to be more attractive to price-sensitive buyers.
Malaysia's production rose by 2.3% in September to a two-year high of 1.77 million tons, a two-year high of 1.77 million tons, the survey showed, despite a 10% increase in August. Exports rose 7.7% to 1.40 million tons, the strongest since December.
Palm oil will remain volatile, said Sathia Varqa, owner of Palm Oil Analytics in Singapore. Rising supplies and macro headwinds are stacked against favorable export conditions of low cash offers, palm s wide discount to rival vegetable oils, weak ringgit and declining freight rates, he said. In October, prices could be between 3,300 ringgit $710 and 3,700 ringgit a ton. On Wednesday, the December delivery futures traded at 3,750 ringgit.
The numbers of September 2022, in million tons, are based on the median of 10 estimates. On October 11, the Malaysian Palm Oil Board will release official stockpiles, production and export data.