Malaysian palm oil stocks hit 6.5-year high after 8 months of growth, while prices fell 10% in a month

According to the Malaysian Palm Oil Board (MPOB), in October, crude palm oil production in Malaysia increased by 11% compared to September (in September -0.7%, but in August the growth was 2.4%, and in July - 7.09%) to 2.04 million tons, which is the highest figure since August 2015.

Exports also grew by 18.6% (+7.7% in September, -0.7% in August and +3.82% in July) to 1.69 million tonnes, demonstrating the most dynamic growth in a year against the backdrop of falling prices and increasing demand.

Production growth exceeded export growth, so palm oil stocks in the country increased by 4.4% in October (the 8th month in a row) to a 6.5-year high of 2.46 million tons (in September +7.2%, in August +4.2%, in July +4% and in June +4%).

December palm oil futures on the Bursa Malaysia exchange have remained almost unchanged after the release of such a bearish report and are trading at the previous week's level - 4,112 ringgit/t or $973/t, but have already fallen by 10.5% in a month.

Traders expect production to begin to decline in November and exports to increase, as palm oil is currently cheaper than other vegetable oils.

It is worth noting that in the period from November 1 to 10, palm oil exports from Malaysia decreased (according to surveyors) compared to the same period in October by 9.5-12.3%, so if this trend continues, quotes will continue to fall.

The growing supply of sunflower, rapeseed and soybean oils continues to fill the global vegetable oil market, so prices have moved downward and in the coming months will remain under pressure from increased soybean supplies from the US to China and the oversaturation of the Chinese market with soybean oil, as well as lower oil prices.