Malaysia's palm oil inventories likely to hit 3-year high

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Malaysia's palm oil inventories likely to hit 3-year high

KUALA LUMPUR Malaysia's palm oil inventories likely swelled to their biggest in nearly three years as a result of peak production season, according to a Reuters survey on Wednesday.

The median estimate of nine traders and analysts polled by Reuters shows that stocks rose 8 per cent from August to 2.27 million tons, the highest since October 2019.

Output in the world's second-largest producer went up for a fourth consecutive month. It increased by 2 per cent to 1.76 million tons.

Exports rose 8 per cent to 1.41 million tons as top buyer India stocked up on edible oil ahead of the Diwali festival in October.

India's palm oil imports jumped to their highest level in a year in September, boosted by strong demand for tropical oil ahead of the festival season and a steep discount compared to rival oils.

The demand for palm oil has been subdued as tough COVID 19 restrictions and intermittent lockdowns in key importer China hurt consumption levels, weighing on the benchmark futures contract.

The Kuala Lumpur-based analyst said investors will be watching for any announcement on an easing of China's zero-COVID policy during the ruling Communist Party's national congress beginning October 16, as well as an announcement on an easing of China's zero-COVID policy.

Demand can be expected to pick up when the country starts to normal post-COVID, according to the analyst.

Indonesia, the world's biggest producer of palm oil, is expected to extend an export levy waiver on edible oil to the end of this year. The Malaysian Palm Oil Board MPOB will release its data on October 11.

In August, official stock of 2,094, 667 tons, plus the above estimated output and imports, yield a total September supply of 3,956, 667 tons. Domestic consumption in September was estimated to be 281,667 tonnes, based on the median of exports and closing stocks.