Palm Oil Futures to Rise as Malaysia's Inventories Decline

Data from the industry regulator revealed that floods caused output to decline, causing Malaysia's palm oil stockpiles to fall for the third consecutive month in December, reaching its lowest level since May 2023.The world's second-largest producer of palm oil after Indonesia has seen a decline in inventories, which may help benchmark futures, which have had a significant correction in recent weeks after hitting their highest level in around two and a half years in November.

Malaysia's palm oil stocks at the end of December fell 6.91 per cent from a month earlier to a 19-month low of 1.71 million metric tons, the Malaysian Palm Oil Board (MPOB) data showed.

Crude palm oil production was down 8.3 per cent to 1.49 million tons, the lowest since March 2024, while palm oil exports fell 9.97 per cent to a six-month low of 1.34 million tons.

Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group, stated that the December MPOB data is somewhat encouraging for the market because stocks fell more than predictable as a result of an increase in local consumption.

Malaysia consumed 309,865 tons of palm oil in December, up 53% from the preceding month, according to the figures. In order to draw in budget-conscious consumers, palm oil needs to drop its premium pricing compared to competing soybean and sunflower oils, according to the sources.