Malaysia end-March palm oil stocks hits four-month peak on higher imports, output

Higher-than-expected imports boost inventories

A worker arranges palm oil fruit bunches at a factory in Tanjung Karang, Malaysia August 14, 2020.

A worker arranges palm oil fruit bunches at a factory in Tanjung Karang, Malaysia August 14, 2020.

REUTERS/Lim Huey Teng

KUALA LUMPUR - Malaysia's end-March palm oil stocks jumped more-than-expected to a four-month top, boosted by higher imports and production, but a surge in exports kept domestic supply in check, data from the industry regulator showed on Monday.

Inventories in the world's second-largest producer rose 10.7% from the previous month to 1.45 million tonnes, according to Malaysian Palm Oil Board (MPOB) data.

Stockpile rose at the highest pace in 11 months, also helped by weaker domestic consumption which plunged to its lowest in 11-months from a high base in February, said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.

Crude palm oil production expanded for the first time in six months, rising 28.4% from February to 1.42 million tonnes, MPOB said.

"After a strong rebound in March, April output could be lower," Varqa said.

Palm oil exports jumped 31.8% to 1.18 million tonnes, its highest since January, while imports beat market expectations to surge 57% to 137,332 tonnes, MPOB said.

"High levels of imports in March suggest a prevailing tightness in the local market. To compensate that, imports increased significantly," said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

The higher inventory is bearish on Malaysia's benchmark crude palm oil prices.

"Overall the market will remain defensive, with the local industry grappling with a lack of manpower and the tightness in competing vegetable oils worldwide," he added.

A Reuters survey had forecast stockpile inched up 1.3% to 1.32 million tonnes. Production was expected to rise 25% to 1.38 million tonnes. Exports were seen up 25% to 1.12 million tonnes.

Following is a breakdown of the Malaysian Palm Oil Board figures and Reuters estimates for March (volumes in tonnes):

March 2021 March 2021 poll Feb 2021* March 2020 Output 1,423,354 1,382,000 1,108,236 1,401,481 Stocks 1,445,970 1,317,808 1,306,022 1,729,592 Exports 1,182,084 1,119,445 896,647 1,184,973 Imports 137,332 80,000 87,326 79,216 *indicates revised figures by the Malaysian Palm Oil Board

(Reporting by Mei Mei Chu; Editing by Jacqueline Wong and Shailesh Kuber) ((; +6-139-492-9424; Reuters Messaging: @meixchu on Twitter))

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