KUALA LUMPUR - Malaysian palm oil inventories at the end of May rose slower than expected, as an unexpected jump in domestic consumption of the edible oil offset higher production, official data showed on Thursday.
Stockpiles at the world's second-largest producer expanded 1.49% from April to 1.57 million tonnes, its highest in seven months, according to data from the Malaysian Palm Oil Board (MPOB). This is smaller than a Reuters poll that pegged a 6% rise.
Meanwhile, production and exports were also below market estimates.
Crude palm oil production gained for a fourth consecutive month, rising 2.84% from April to 1.57 million tonnes.
Exports declined 6% to 1.27 million tonnes.
Despite the COVID-19-driven movement restrictions across Malaysia, the domestic consumption rose while imports dropped, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
Domestic consumption nearly doubled to 372,039 tonnes, which analysts and traders said came as a surprise and reined in stocks.
"Higher spending on groceries during the Ramadan fasting month and the Eid festival may have boosted edible oil consumption in May," said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.
"The data at first sight shall support the palm oil prices at the current price range as its spread over soft oils has widened," Bagani said.
Following is a breakdown of the Malaysian Palm Oil Board figures and Reuters estimates for May (volumes in tonnes) PALM/POLL :
May 2021 May 2021 poll April 2021* May 2020 Output 1,571,523 1,575,000 1,528,121 1,651,337 Stocks 1,568,943 1,644,000 1,545,905 2,029,579 Exports 1,265,460 1,350,000 1,346,326 1,368,746 Imports 89,014 100,000 109,847 37,101
*indicates revised figures by the Malaysian Palm Oil Board
(Reporting by Mei Mei Chu; Editing by Tom Hogue and Uttaresh.V) ((firstname.lastname@example.org; +6-139-492-9424; Reuters Messaging: @meixchu on Twitter))