Palm oil exports from Malaysia fell by a hefty 22.69% in January, weighed by soft demand from key markets and competition from neighboring producer Indonesia, data from the Malaysian Palm Oil Board’s (MPOB) monthly supply and demand estimates showed Friday, February 10.
Exports in January came to 1.14 million tonnes, largely within industry expectations, with earlier estimates pegging exports at around 21-26% lower against December, while cargo surveyors had gauged a larger drop at around 26-27%.
The level marks the lowest seen since April last year and comes amid a seasonal slowdown in demand during the winter months and key holidays in major markets such as China.
Stock levels rise
The drop in exports combined with higher-than-expected imports and better performance in production led to an increase in end-month stock levels, with inventories rising by 3.3% on the month to 2.268 million tonnes, slightly above earlier estimates of 2.18-2.26 million tonnes.
The level is also much higher compared to end-January inventories in the last three years, where stocks have averaged below 2 million tonnes.
Imports in January amounted to 144,937 tonnes, a 5-month high and a jump of 123% from December, with olein seen taking the lion’s share of imports, while crude palm oil (CPO) production came in at 1.38 million tonnes, 14.7% lower against December.
Earlier industry estimates had pegged production at 13.7-16% less on the month, while the Malaysia Palm Oil Association had previously gauged output at 1.39 million tonnes, or 13.93% lower.
Local disappearance or consumption, on the other hand, rose by 5.44% to 318,225 tonnes.
(Note: MPOB has revised its December export figures to 1,473,846 tonnes from 1,468,448 tonnes and import figures to 64,911 from 47,114 tonnes previously, resulting in consumption for December at 301,725 tonnes versus 291,181 tonnes reported previously.)
Moving forward, Malaysian palm oil exports are expected to show some recovery, with tightened supply availability from competitor Indonesia amid adjustments to its export policies and increased domestic demand for its B35 biodiesel blending mandate.
Early indications for exports in February have started to show improvement, with cargo survey Intertek Testing Services (ITS) pegging exports for the period February 1-10 at 39.31% higher on the month at 345,080 tonnes.
At the same time, price competition from alternative oils and limited signs of buying recovery also continue to weigh on the demand for palm oil.
