Malaysia’s March palm oil stocks hit 10-month low on strong export rebound

Malaysia’s palm oil stocks at the end of March slid to their lowest level seen since May 2023, with inventories reported at 1.715 million tonnes, figures from the Malaysian Palm Oil Board (MPOB) showed on Monday April 15.

This was 10.7% lower compared with February and marks a fifth straight monthly drop in inventories amid a strong rebound in exports, despite production also improving in March.

Malaysia’s palm oil exports in March rose for the first time since October 2023 to 1.32 million tonnes, a 28.6% increase from February with the level also exceeding earlier industry expectations of around 21%, indicated by polls and newswires.

The growth largely stemmed from a sharp increase in processed palm oil (PPO) exports, with shipments jumping 35.3% to 1.05 million tonnes, while crude palm oil (CPO) exports rose 7.7% on the month to 266,913 tonnes, according to MPOB figures. 

Exports were due to recover, ahead of Eid

Exports were primed to recover from February, with Muslim-majority destination markets seen stocking up ahead of the Eid festivities in early April, while India – another key market – was also restocking and picking up prompt cargoes on better import margins, sources said.

The rise in exports also outweighed the growth seen in production, with output for March rising by 10.57% month on month to 1.392 million tonnes – also slightly above market expectations of 8-9.8%. 

Earlier production estimates from the Malaysian Palm Oil Association also pegged output at 1.386 million tonnes, or around 9.7% higher on the month.

March production was also 8% higher year on year, with total output for the first three months of 2024 at 4.05 million tonnes, 3.4% more than the same period of 2023.

A drop in palm oil imports in March also contributed to the lower end-month inventories, with volumes falling by 32.8% to 21,894 tonnes and consisting solely of PPO, with implied local disappearance or consumption estimated at 301,877 tonnes – 17.9% lower compared with February. 

The drop in palm oil stocks for March has been largely anticipated by the market, with attention now turning to production and export performance for April where output is expected to be lower due to the Eid holiday, which could in turn affect inventories further, sources told Fastmarkets.

Exports on the other hand, have remained relatively steady so far with cargo surveyor Intertek Testing Services (ITS) pegging shipments for the first half of April at 9.2% higher on the month to 633,680 tonnes, a slightly slower pace compared to the 12.69% monthly increase reported for April 1-10. 

The most active third-month CPO futures contract for June-delivery on the Bursa Malaysia exchange traded sideways in the first half of the morning with the market awaiting MPOB’s supply and demand data release, with the contract closing 0.12% lower at midday to 4,277 ringgit ($896) per tonne. 

Note: In the March data release, the MPOB revised February figures as follows: CPO production to 1,259, 383 tonnes from 1,259,572 tonnes, CPO exports to 247,807 tonnes from 241,803, PPO exports to 776,719 tonnes from 773,734 tonnes, CPO stocks to 1,025,982 tonnes from 1,026,089 tonnes and PPO stocks to 894,131 tonnes from 893,121 tonnes resulting in implied local disappearance for February revised to 367,491 tonnes from 348,194 tonnes reported previously