Malaysian palm oil stocks rose despite production cuts and rising exports, halting price gains

According to the Malaysian Palm Oil Board (MPOB), in September, crude palm oil production in Malaysia decreased by 0.7% compared to August (in August, the growth was 2.4%, in July - 7.09%) to 1.84 million tons, and exports increased by 7.7% (-0.7% in August and +3.82% in July) to 1.43 million tons. However, against the background of the recalculation of opening stocks and the activation of imports, palm oil stocks in the country increased in September (for the 7th consecutive month) by another 7.2% (+4.2% in August, +4% in July and +4% in June) to a 2-year high of 2.36 million tons.

On Friday, November palm oil futures on the Bursa Malaysia exchange fell by 1% to 4,544 ringgit/t or $1,076/t, partially losing a speculative increase of 2.3% over the week, but rose by 2.5% in dollar terms over the month due to increased exports, which, according to survey company AmSpec Agri Malaysia, grew by 19% to 495,500 tons in the period from October 1 to 10 compared to the same period in September.

Delayed deliveries and forecasts of reduced sunflower harvests in Ukraine and the Russian Federation are leading to higher prices for sunflower oil and stronger demand for palm oil. Quotes also support forecasts of reduced palm oil supplies from Indonesia after the country's government confirmed plans to launch production of a biodiesel blend based on 50% palm oil in the second half of 2026, which would completely eliminate the need for diesel imports but increase demand for crude palm oil by 5.3 million tonnes.

A sharp drop in oil prices on Friday of 3.5% and rising inventories will continue to put pressure on palm and related vegetable oil prices this week.