Palm oil reserves in Malaysia have reached their highest level in four months due to high productivity and stagnation in exports in the world’s second largest palm oil producer.
Stocks rose nearly 11 percent month on month to 1.87 million tons in June, according to the median result of 14 estimates in a Bloomberg survey of analysts and traders.
Crude palm oil production fell by about 1 percent to 1.50 million tons after a 27 percent increase in May, according to the survey. On the other hand, exports remained unchanged at 1.08 million tons after falling for two consecutive months.
Fast Markets Palm Oil Analytics Senior Analyst Sathia Varqa said Malaysian stocks in June will increase due to higher production levels in May. Still, Varqa explained that exports should increase strongly in July, after inactivity in May and June.
While investors are wary of any possible disruption to food crops due to the impact of El Niño, the World Meteorological Organization said the onset of the event would “vastly increase” the likelihood of record-breaking temperatures.