Malaysia Palm Oil Stocks May Hit Record High in September

Malaysia’s palm oil inventories could reach a record 3.45 million tons in September, up 22% from the previous month, according to a Bloomberg survey of market participants. This would surpass the previous peak of 3.22 million tons set in December 2018, driven by stronger-than-expected production.

September’s output may have increased 16% to 2.11 million tons, marking the highest level ever recorded for the month. Meanwhile, exports are estimated to have fallen by around 12% to 1.13 million tons, the lowest in four months. The decline in exports is attributed to Malaysia’s loss of market share due to a wide premium over Indonesian palm oil and high vegetable oil inventories in key importing markets.

The surge in stocks is already exerting downward pressure on prices. Kuala Lumpur palm oil futures dropped from a September high of MYR 5,049 per ton to around MYR 4,535 per ton on October 5. Analysts expect prices to remain within the MYR 4,300-4,500 per ton range in the near term.

Inventories are expected to peak in October before gradually declining as production slows seasonally and exports recover, particularly to India. However, high reserves could help cushion a potential tightening in global supply in 2027, as El Niño affects yields and Indonesia’s biofuel sector absorbs more palm oil.