MUMBAI: Malaysia’s palm oil stocks are expected to decline in the coming months, ending the year at around 1.7 million tonnes, as a seasonal slowdown in production coincides with rising exports to meet festive season demand, the industry regulator says.

The expected drop in inventories in the world’s second-largest palm oil producer after Indonesia could support benchmark futures, which have been under pressure recently because of cheaper supplies of rival soyoil.

“Production is slowly coming down, and we expect exports to rise in the coming months on festive season demand,” Datuk Ahmad Parveez Ghulam Kadir, director-general at the Malaysian Palm Oil Board (MPOB), said yesterday.

Malaysian palm oil production typically tapers off towards year-end following a strong September quarter.

Palm oil stocks in Malaysia rose 4.18% on-month in August to 2.2 million tonnes, the highest since December 2023, data from the MPOB showed.

Palm oil prices have been under pressure in recent weeks as a sharp drop in soy oil prices made it costlier.

This prompted top palm oil buyer India to boost soy oil purchases for the coming months.

Despite this, palm oil prices are likely to remain firm in the coming months due to uncertainties over Indonesian supplies, Ahmad Parveez said.

Exports from Indonesia could be affected by a proposed implementation of the B50 biodiesel programme and government seizures of oil palm plantations, he said.

Indonesia currently mandates a 40% palm oil content in biodiesel and plans to raise it to 50% starting next year.

Indonesia handed over 674,178 ha of palm oil plantations to state firm Agrinas Palma Nusantara earlier this month, taking the total area of land given to the company to 1.5 million ha.

Oil palm replanting in Malaysia is progressing slowly, and to accelerate it, the MPOB has urged the government to raise the allocation to RM280mil for 2026, up from RM100mil this year, he said. — Reuters

Source: The Star