Malaysia’s end-May palm stocks drop on stagnant output

Malaysia's palm oil inventories at the end of May decreased as production stayed flat, while exports rose to five-month highs, data from Malaysia's Palm Oil Board (MPOB) show.

Palm stocks fell by 7.4pc from April to 1.52mn t, as a lack of plantation workers kept output unchanged at 1.46mn t from the previous month. This is the country's lowest May production volume since 2016, according to MPOB data. A halt in supplies from Indonesia - as the world's largest producer banned overseas sales - drove more buyers to Malaysia, spurring a 26.7pc spike in May exports to 1.36mn t compared with April volumes.

Kuala Lumpur in September last year promised to allow 32,000 migrants to join plantations that have been critically short of harvesters since the start of the Covid-19 pandemic. But this has faced repeated permitting roadblocks and remains unfulfilled. Advocacy group the Malaysian Palm Oil Council consequently lowered its output expectations for the year by 300,000t to 18.6mn t in early June.

Malaysian exports may retreat again in June, as Indonesia has allowed exports to resume as long as producers fulfil a domestic sales quota and introduced several measures to clear inventories.

Indonesia exported around 56pc of global palm oil volumes last year, with Malaysia exporting 28pc. Malaysian biodiesel exports rose by 98pc on the month to 46,345t in May, according to the MPOB. May oleochemical exports fell by about 8.2pc to 222,669t.

By Lauren Moffitt