Palm-oil reserves in Malaysia, the second-biggest supplier after Indonesia, declined to a six-month low in February after production slumped for a fourth straight month, according to a Bloomberg survey.
Stockpiles fell 5.4 percent to 1.9 million metric tons, dropping below 2 million tons for the first time since August, according to the median estimate in the survey of three analysts and two plantation companies. Inventories are still expected to be 28 percent higher than a year earlier, according to the survey. Official estimates are scheduled for release March 12.
Global cooking-oil supplies are declining as soybean output drops in Brazil and Argentina because of drought. Lower palm-oil stockpiles may help boost prices in Malaysia that gained 3.6 percent this year, while potentially raising profits for companies including Sime Darby Bhd.
“It’s a lean season for palm oil production,” Vimala Reddy, an analyst at Karvy Comtrade Ltd., said by phone from the Indian city of Hyderabad. “Export demand has been better in terms of comparison to January.”
Output fell 8.3 percent to 1.18 million tons last month, the lowest since February last year, from 1.29 million tons in January, according to the survey. Exports dropped 7.3 percent to 1.28 million tons, the survey showed. Shipments fell 10.5 percent to 1.18 million tons in February from a month earlier after 12 percent drop in January, according to surveyor Intertek.
The May-delivery contract gained 1.1 percent to 3,303 ringgit ($1,099) a ton on the Malaysia Derivatives Exchange today. Futures advanced 6.2 percent last month, the best monthly performance since December 2010, after reaching an eight-month high of 3,321 ringgit on Feb. 28.
Palm oil may jump to 4,000 ringgit on declining global vegetable-oil stockpiles, Dorab Mistry, director of Godrej International Ltd., said yesterday. The global soybean harvest may drop by 19 million tons in 2011-2012, the most ever, Hamburg-based researcher Oil World said on Feb. 28.
Exports are poised to recovery as India and China, the biggest consumers, buy more of the tropical oil because of reduced soybean-oil supply from Argentina and Brazil, Reddy said. Palm oil and soybean oil are substitutes in food and fuels.
Palm-oil production would take time to rebound from the seasonally low output months of January and February, with a recovery expected only in June or July, said Karvy’s Reddy. The low-output cycle may end in November, Godrej’s Mistry said.
Output in Malaysia, will reach 19 million tons this year as more plantations mature, Plantation Industries and Commodities Minister Bernard Dompok said Jan. 19. Production gained 11 percent to 18.9 million tons in 2011, according to data from the Malaysian Palm Oil Board, which releases the monthly figures.