Palm oil futures rebounded into positive territory after official data showed lower-than-expected growth in Malaysian stocks, with signs too of a pick-up in exports this month, despite Indonesia’s extension to its export tax waiver.
Palm oil futures for January, having fallen by 2.7% in early deals, revived to stand at 4,304 ringgit per tonne in late deals in Kuala Lumpur, up 0.1% on the day.
The recovery followed the release by the Malaysian Palm Oil Board of data showing that palm oil inventories in the country, the world’s second-ranked producer and exporter of the vegetable oil, grew by 86,700 tonnes last month to 2.40m tonnes.
While representing growth of 31% year on year, and hitting the highest since September 2019, the figure came in 130,000 tonnes below market expectations.
Imports down, exports up
The shortfall reflected in part a halving to 66,000 tonnes in Malaysia’s palm oil imports last month, a figure well below market forecasts.
However, production, at 1.81m tonnes, while the strongest October total in four years, also came in shy of market expectations.
By contrast, exports, at 1.50m tonnes, exceeded forecasts by some 20,000 tonnes, and hit their highest in 13 months.
The market received further upbeat news on Malaysian exports when cargo surveyor Amspec Agri pegged the country’s shipments for the first 10 days of November at 420,477 tonnes, up by 12.7% month on month.
‘Limits the downside’
The continued strength in Malaysian exports eased concerns of a hit from a decision by rival Indonesia to extend to the end of the year, from the close of December, a waiver on its export levy up to a reference price of $800 per tonne.
The reference price currently stands at $770.88 per tonne.
“There is always a bit of concern that Indonesia may take trade away from Malaysia,” a European vegoils trader told GrainPriceNews, noting too that the market had “passed the season for some big festivals in India,” the top importer.
The trader also highlighted sharp discount of palm oil to soyoil, which stood at an unusually high $729 per tonne on Thursday, equivalent to more than 80%.
“That provides quite a good floor for palm oil, and limits the downside for now.”