Palm oil stockpiles in Malaysia, the second-biggest grower, climbed to the highest level in 18 months in June as production expanded, even as exports reached near-record highs.
Inventory of the edible oil, used mostly in food, climbed 6.8 per cent to 2.05 million metric tonnes from a month earlier, the highest level since December 2009, the Malaysian Palm Oil Board said in a statement yesterday. That was higher than the median estimate of a 2.03 million tonnes given by three analysts and two plantation companies in a Bloomberg News survey.
Rising inventories may pressure palm oil prices, which have slumped 22 per cent from a 35-month high of 3,967 ringgit (Dh4,867) a tonne on February 10.
Output expanded 0.7 per cent to 1.75 million tonnes from May, the higest in 20 months, while shipments jumped 12.4 per cent to 1.58 million tonnes, the highest level since the all-time high reached in December 2008.
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"I don't think production will surge much from this level, with the pick-up in exports, stockpiles will fall below 2 million tonnes very quickly," Alvin Tai, an analyst at OSK Research, said by phone yesterday.
Palm oil demand will rise starting in October as production of other oilseeds rises at a slower pace, researcher Oil World said.
Palm oil futures for September delivery gained as much as 0.8 per cent to 3,103 ringgit a tonne and ended the morning trading session at 3,086 ringgit in Kuala Lumpur. Shipments of palm oil from Malaysia rose 1.3 per cent to 400,316 tonnes in the first 10 days of July from a month earlier, market surveyor Intertek said on Saturday.