Malaysia's April palm oil production below expectations, stocks recover

New Delhi — Malaysia's palm oil production in April rose 6.98% on the month to 1.52 million mt as plantations enter a seasonally higher production phase, the national industry regulator said.

The production figure was slightly lower than analysts' expectations of 1.55 million mt for April.

The data was slightly bearish for the palm oil market sentiment, which is currently trading at record highs, multiple industry watchers told S&P Global Platts.

After the announcement, the most active third month-futures on the benchmark Bursa Malaysia Derivatives exchange fell to MR 4,349/mt, from an opening price of MR 4,398/mt in early May 10 trading.

Malaysia is the second largest producer of palm oil globally, after Indonesia, and produces about 18 million mt to 19 million mt annually. Palm oil is the most produced vegetable oil in the world.

Monthly palm oil stocks rose 7.1% to 1.55 million mt from 1.45 million mt in March, as an increase in production and milling activities in the Sabah region and Peninsular Malaysia outpaced export growth and overall monthly domestic consumption fell by 25%, data from the Malaysian Palm Oil Board (MPOB) showed.

Analysts had forecast April palm oil inventories to range between 1.44 million mt and 1.56 million mt.

Exports were up by 12.6% to 1.34 million mt in April and in-line with analyst estimates.

Despite pandemic-led concerns of a slowdown in India, the largest buyer of crude palm oil, increased buying from China has kept the momentum going, May data from trade surveyors ITS and AmSpec showed.

"The May 1-10 palm oil export performance as ITS and AmSpec estimated the export at around 447,000 mt – 469,000 mt, a 30%-36% rise from the same period in April," Anil Kumar Bagani, research head at vegetable broker Sunvin Group said.

Other highlights from MPOB:

• Crude palm oil (CPO) stocks grew 5.80% to 785,384 mt from March
• Processed palm oil stocks rose 8.41% month on-month to 760,597 mt
• April biodiesel exports rose to 27,640 mt, up 99.73% from March