Record Stocks in Malaysia Likely to Pressure Palm Oil Prices

Kuala Lumpur: Data from the Malaysian Palm Oil Board (MPOB) reveals that Malaysia's total palm oil inventory surged to an all-time high of 3.511 million tonnes by the end of September—an increase of 24.54% compared to August. This figure exceeds the previous record of 3.22 million tonnes set in December 2018 by nearly 300,000 tonnes. The closing stocks for September comprised 2.163 million tonnes of crude palm oil (CPO) and 1.348 million tonnes of refined palm oil/RBD olein.

A sharp rise occurred due to the peak production season coinciding with sluggish export performance. Palm oil production in September rose by 16% to reach 2.11 million tonnes, setting a new record for the month.

This substantial increase in supply and availability is expected to exert downward pressure on palm oil prices in Malaysia. According to a leading industry analyst, unless there is a significant surge in exports to countries like India and China, the benchmark crude palm oil futures price on the Bursa Malaysia Derivatives (BMD) exchange is likely to hover between 4,300 and 4,500 ringgit ($1,050–$1,100) per tonne. Futures prices were recorded at 4,535 ringgit ($1,108) per tonne the previous day, well below the September peak of 5,049 ringgit ($1,234) per tonne.