KUALA LUMPUR, 12 July 2022 — Malaysia’s palm oil stocks in end-June rose to their highest in seven months as its exports were throttled by rival Indonesia’s policies to boost its own shipments, industry regulator data showed on Tuesday.
Inventories in Malaysia, the world’s second-largest producer, rose 8.76% from the previous month to 1.66 million tonnes, its highest since November, according to the Malaysian Palm Oil Board (MPOB).
Crude palm oil production climbed 5.76% from May to 1.55 million tonnes, also at a seven-month peak.
However, the production rise was smaller than expected, underscoring continuous supply disruptions at most plantations due to labour shortages, a Kuala Lumpur-based trader said.
Exports plunged 13.26% to 1.19 million tonnes after Indonesia reversed a short-lived export ban in May and instead imposed a string of rules to encourage overseas shipments.
Indonesia last week said it plans to increase the content of palm oil-based fuel in its biodiesel to 35%, known as B35, from 30%, starting on July 20. It is also mulling a cut to its export levy to spur exports and reduce high inventories.
The B35 biodiesel policy will help raise domestic palm oil usage, reduce stocks and improve domestic price sentiment, Ivy Ng, regional head of plantations research at CGS-CIMB Research, said in a note.
However, it will take time for the policy to effectively lower inventories as the additional absorption rate of crude palm oil is estimated at 134,000 tonnes a month, she added. – Reuters
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