KUALA LUMPUR – Malaysia’s end-May palm oil inventories rose for the first time in four months, after output surged to its highest level so far this year, data from the nation’s palm oil board showed on Monday.
Stockpiles in the world’s second-largest producer rose 12.63% from the month before to 1.69 million metric tonnes, the Malaysian Palm Oil Board (MPOB) said.
Production in May swelled 26.8% from April to 1.52 million metric tonnes, the highest since December, helped by more harvesting days and as a shortage of labour continue to ease.
Harvesting is in full force possibly due to the return of migrant workers after a pandemic-induced labour shortage, signalling the possibility of good production continuing through the second half of the year, a Kuala Lumpur-based trader said.
Exports from Malaysia, which had been facing increasing competition from Indonesia, were down 0.78% to 1.08 million metric tonnes.
The data may weigh on Malaysia’s benchmark crude palm oil prices as inventories and supply were higher than expected.
A Reuters survey had pegged May inventories at 1.6 million metric tonnes. Production was seen at 1.45 million metric tonnes, and exports at 1.08 million metric tonnes.
In June, palm oil yields may be hit by increasingly hot and dry weather, as both top producers Malaysia and Indonesia have warned of El Niño arriving during the month.
Early signs of El Niño are threatening food producers across Asia, with palm oil and rice production likely to suffer in Indonesia and Malaysia – which supply 80% of the world’s palm oil – and Thailand, according to analysts.