Palm oil supply in Malaysia, Indonesia to rise in April: sources

New Delhi — Palm oil production and ending stocks at major producers Malaysia and Indonesia are set to rise in April, buoyed by a combination of favorable weather, easing labor shortages and increased fertilizer use, sources told S&P Global Platts.

In Malaysia, April production is expected to increase by 8.92% month on month to 1.55 million mt, sources said.

Meanwhile, Malaysian palm oil exports in April are set to increase 8.71% month on month to 1.28 million mt, according to Marcello Cultrera, institutional sales manager at Philip Futures.

Anil Kumar Bagani, research head at vegetable oil brokerage Sunvin Group, said exports are likely to reach 1.37 million mt in April.

Other industry estimates have pegged Malaysia's April production at 1.55 million mt.

With the rise in production and export volumes, Malaysia's palm oil inventories in April are expected to range between 1.44 million mt and 1.56 million mt, an increase from March but still far lower than its average monthly inventory of 1.723 million mt in 2020, according to Malaysian Palm Oil Board (MPOB) data.

The official numbers from MPOB around the April supply and demand data will be released on May 10.

Production recovery in Indonesia

Indonesia is expected to see a recovery in output as wet weather conditions that delayed harvesting and milling activities until January have now subsided.

Indonesian palm oil production reached 3.5 million mt in April, up 10.8% from March, Cultrera said. Exports are set to increase 14.6% month on month to 2.2 million mt, he said.

Indonesia is the world's largest palm oil producer and exporter and accounts for about 54% of global supply.

"We expect Indonesian April 2021 palm oil production to increase on month on month basis on the back of seasonal palm oil production increase," Oscar Tjakra, a senior analyst at RaboResearch Food & Agribusiness said. "Similarly, we expect Indonesian palm oil ending stocks to increase on month-on-month basis."