Malaysia’s palm oil stocks surged to a six-month high in August, reaching 1.88 million metric tons, a 7.34% increase from the previous month. This rise comes as crude palm oil production hit a nine-year high of 1.89 million tons, marking a 2.87% increase from July. However, exports fell by 9.74% to 1.53 million tons during the same period.
The increase in stocks could exert pressure on benchmark futures, which are already near their lowest levels in seven months. Analysts had anticipated inventories to be around 1.86 million tons, with production forecasts aligning with actual figures.
Despite the high production levels, there is currently no indication of increased demand from major markets such as India and China. This lack of demand could further squeeze prices, particularly as September’s palm oil exports from Malaysia have already seen a decline of 5.2%.
Market participants are also closely monitoring Indonesia’s biodiesel policy and potential changes in export duty rates, which may impact price movements in the coming months. Indonesia is expected to lower export levy rates to enhance competitiveness against other vegetable oils and improve farmers’ income.