KUALA LUMPUR/SINGAPORE (Reuters) - Malaysia’s palm oil inventories fell to a three-month low in November as a seasonal decline in production curbed yields in the world’s second-biggest producer, while exports dropped due to slowing purchases by top importers.
Stockpiles slid to 2.26 million tonnes, down 4.1% from the previous month, industry regulator the Malaysian Palm Oil Board (MPOB) said on Tuesday. This compares with a Reuters survey forecasting reserves to drop 5.7% to 2.22 million tonnes.
“MPOB data showed higher end stocks than most forecasts,” a Kuala Lumpur-based trader said, adding that it should lead to prices easing.
November palm oil output fell 14.4% to 1.5 million tonnes, compared with the previous month, while exports declined 14.6% to 1.4 million tonnes, the MPOB data showed.
Production was forecast to fall 10.4% from October to 1.61 million tonnes, and exports were seen falling 5.2% to 1.56 million tonnes.
Stocks were the key surprise, with inventories above all surveys and market expectations, said Marcello Cultrera, institutional sales manager at Phillip Futures in Kuala Lumpur.
“This seems quite bearish considering the heavily overdone price levels.”
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange lost 0.2% to 2,895 ringgit ($694.24) at the end of the morning session. [POI/]
The market climbed to its highest since Feb. 2017 on Monday.
A further decline in Malaysia’s exports so far this month could add pressure on prices.
Exports of Malaysian palm oil products for Dec. 1-10 fell 11.3% from a month ago, according to an independent inspection company AmSpec Agri Malaysia.
Still, there was bullish news from Indonesia with plans to boost biodiesel consumption.
Indonesia, the world’s largest palm oil producer, plans to implement a biodiesel programme with 40% bio-content (B40) between 2021 and 2022, a government official said on Tuesday.
From January, Southeast Asia’s largest economy is set to bring in biodiesel with 30% bio-content through the B30 programme, which sent palm prices higher on concern that it will export less palm oil - a feedstock for the fuel.
($1 = 4.1700 ringgit)
Reporting by A. Ananthalakshmi in Kuala Lumpur and Mei Mei Chu in Singapore; Writing by Naveen Thukral; Editing by Kim Coghill and Uttaresh.V