Malaysia's palm oil stocks seen falling by end-Nov on lower output: Platts survey

Lower palm oil output in November by world's second largest producer Malaysia, along with higher exports likely pushed the country's palm oil stockpile below 1.80 million mt, a S&P Global Platts survey showed.

End-November palm oil stocks were seen at 1.78 million mt, down 3.2% from 1.83 million mt a month before, a median estimate of seven industry analysts and traders showed.

Exports for the month rose 10.9% over October to 1.57 million mt, while production fell by 1% to 1.70 million mt, according to the survey.

"Heading forward, December-February will be a lean production period which suggests stocks may stay tight for the next 3-4 months," Aditya Jeripotula, head of research at commodities firm TransGraph Consulting said.

The Malaysian Palm Oil Board, or MPOB will publish monthly supply and demand data Dec 10.

Earlier data from the MPOB showed Malaysia's palm oil production between January to October totaled 15.03 million mt, down from 16.32 million mt in the 2020 period.

"We do not see a major improvement in production until the second quarter of 2022 due to the underlying labor issue alongside the seasonal factor," Jeripotula said.

Malaysia's oil palm plantations have suffered labor shortages since last year as foreign workers have been unable to return to work.

According to Sathia Varqa, founder of Singapore-based Palm Oil Analytics, there is a shortage of about 70,000 oil palm plantation workers in Malaysia. While the country has been working on bringing in 32,000 workers, the new COVID-19 variant omnicron may delay this plan.

Palm oil prices, which crashed to a two-month low following news of the omnicron variant, had rallied 3% on Dec 7 on market concerns over lower output.

However, the most active third-month palm oil futures on the Bursa Malaysia Derivatives fell marginally to MR 4,840/mt ($1,147.74/mt) on Dec 9, reflecting losses in rival soybean oil after the US announced that it may reduce biofuel mandates for 2020 and 2021.