Malaysia, the second largest producer and exporter of palm oil, reported better-than-expected month-end stocks in February as local consumption and exports dipped, the country's official industry body Malaysian Palm Oil Board, or MPOB, said March 10.
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Palm oil ending stocks fell to 1.52 million mt at the end of February, down 2.1% from the end-January stock level of 1.55 million mt. Exports fell 5.3% on the month to 1.09 million mt in February, MPOB data showed.
A median of eight industry estimates expected end-February stocks to fall to 1.29 million mt, with exports pegged at 1.21 million mt, according to a survey by S&P Global Commodity Insights.
MPOB came up with a "shocker" in terms of Malaysian palm oil end-February stocks on the back of surprisingly lower exports and keeping domestic consumption lower at just 223,000 mt despite festivals, Anil Kumar Bagani, head of research at Sunvin Group said in a note March 10.
The data comes a day after palm oil futures spiked on Malaysia's commodity exchange as news of Indonesia's increased domestic obligations on palm oil suppliers heightened concerns about availability among vegetable oil buyers, who were already hit by the stoppage of sunflower oil shipments from Ukraine and Russia.
Palm oil futures for April and May rose more than 10% March 9, triggering a pause in trade after revised export restrictions from larger rival Indonesia led to strong buying momentum, trade sources said.
The most active May crude palm oil futures on Malaysia's BMD exchange was trading lower by 153 points at MR6,921 ($1,653.37) during afternoon trade on March 10, after going as high as MR7,057/mt and hitting limit up at 3:49 pm local time March 9.
"Lower exports and much lower local consumption vs market expectations lead to higher inventories -- this was a surprise as most surveys were pricing in 150,000-200,000 mt lower ending stocks," Marcello Cultrera, sales manager and derivatives dealer at Kuala Lumpur-based Phillip Futures told S&P Global.
The higher-than-expected stock levels could ease third month palm oil futures prices to MR6,385-6,400/mt levels, Cultrera said.
Leading industry analysts expect record-high prices to continue for the next few months as global edible oil inventories remain tight due to disrupted sunflower oil shipments from the Black Sea as well as lower production from Argentina, the largest exporter of soybean oil.