Malaysian Palm Oil Exports See Sharp Rebound in July

This week, the Malaysian Palm Oil Board (MPOB) disclosed the fundamental aspects of supply and demand for Malaysian palm oil for the month of July. Key highlights from the report as below.

Malaysian palm oil exports and inventory levels in July surpassed market expectations, with robust exports contributing to a reduction in stockpiles. Exports surged by 39.9% month-on-month. This increase was primarily due to higher orders from key importing countries, such as India and China, for July shipments. The robust demand was driven by a healthy refining margin realized in the preceding months of May and June. Additionally, a price correction made palm oil more cost-competitive than its rival oils, further boosting demand. The closing inventory stood at 1,733.2 million tonnes, marking the first decrease since the end of March and a month-on-month decline of 5.4%

Palm oil production has resumed its upward trend, rising 14.0% month-on-month in July to 1.84 million tonnes, signaling the onset of the seasonal high-production phase. Notably, the Kedah area registered an increase of 80.3% year-on-year, followed by Pahang at 43.6% year-on-year and Negeri Sembilan at 41.4% year-on-year.

The producing regions continue to be in the peak production season, and given that most buyers made substantial purchases in July, demand in August is expected to slow down. High-frequency data indicates that the exports of Malaysian palm oil in the first ten days of August declined by more than 12% compared to the same period last month, potentially capping short-term price gains for palm oil. Earlier this month, palm oil prices reached a seven-month low. However, today Malaysian palm oil futures traded above MYR 3,730 per tonne, climbing for the second session amid a weaker ringgit and strength in rival oils on the Dalian Exchange. Analysts suggest monitoring shifts in Malaysian palm oil exports and inventory accumulation.

Source: Bloomberg