Malaysia's palm oil stocks seen 9% higher on export dip in April: survey

Malaysia's palm oil inventories are expected to rise to 1.61 million mt at end-April, up 9.3% from a month before due to lower exports and better production, a S&P Global Commodity Insights survey showed May 9.

April exports by the world's second largest palm oil producer and exporters are likely to be around 1.15 million mt, down 8.7% from 1.26 million mt in March, according to the median estimate of ten analysts and traders polled by S&P Global.

Cargo surveyors Amspec and Intertek had earlier forecast a bigger dip in exports, with April outflows projected to fall by 14% to 16% on the month as high prices dampened demand from key buyers in Asia and the EU.

Demand from China, the world's second largest vegetable oil buyer, was negligible in the month due to the high price of palm oil vs soybean oil coupled with lockdowns in major cities which had capped appetite for imports.

The Malaysian Palm Oil Board or MPOB will release its monthly data on May 10.

Trade sources expect Malaysia's exports to surge in May, as bigger rival Indonesia announced a complete ban on palm oil exports starting from April 28 to curb accelerating food inflation and cooking oil shortages within the country.

Indonesia's palm oil export ban is likely to be lifted by the end of this month, Manoj Shukla, senior analyst at Agriworld said. This may lead to a slump in Malaysia's ending stocks for May, but for April it may end up being the highest in six months, Shukla added.

Jakarta has said that it will remove the ban when the domestic price of cooking oil goes below Rp 14,000/liter (96 cents/liter). Currently price is around Rp 17,000/liter.

"Malaysian supply and demand data is looking bearish, but now the key factor is Indonesia's export policy." Abdul Hameed, director of sales at Pakistan-based Manzoor Trading Co said, adding that there is market chatter that Jakarta may introduce a quota system for exports in the coming days.

Indonesia and Malaysia account for 85% of the world's palm oil supply.

The S&P Global survey pegged Malaysia's April palm oil production at 1.48 million mt, up from 1.41 million mt in March.

"Production is seen lower due to rain in the second half of the April as well as labor movement due to the Ramadan holidays," Aditya Jeripotula, head of research at Hyderabad-based commodities firm, TransGraph Ltd said.

The price of local deliveries of Malaysian crude palm oil rose from MR 6,251/mt ($1,426.5) on April 1 to MR 7,605.5/mt on April 29, according to MPOB data.

* all figures in million mt