Malaysian palm oil stockpiles hit record high on production surge

Malaysian palm oil stockpiles likely hit a record high in September, driven by a surge in production. The buildup of inventories could further pressure already slumping prices, as traders await stronger exports to major markets like India to help reduce the excess supply.

Output in September jumped 16% to 2.11 million tonnes, the highest ever for that month, while exports fell around 12% to a four-month low of 1.13 million tonnes. The median estimate from a Bloomberg survey suggests stockpiles grew about 22% to 3.45 million tonnes, surpassing the previous record of 3.22 million tonnes set in December 2018.

Jacquelyn Yow, regional head of plantation research at CGS International, noted that the sudden rise in stockpiles came as a shock to the market. She expects prices to remain under pressure, trading between 4,300 and 4,500 ringgit per tonne. Benchmark futures in Kuala Lumpur have already slid from their September peak of 5,049 ringgit.

Despite earlier expectations that volatile weather, including floods and the onset of El Niño, would curb production, the outlook has improved. The US Department of Agriculture raised its full-year production forecast to 20.2 million tonnes, citing better plantation management and improving labour availability. However, record reserves may keep supplies high through the first half of 2027, according to Aditya Jeripotula of DNext Intelligence SA.