Malaysia’s palm oil stocks to hit 2-year low
Malaysia’s palm oil stocks are expected to fall to 1.5 million metric tons by February’s end due to floods and rising Ramadan demand. Tight supply has kept palm oil trading at a premium over soyoil and sunflower oil, impacting price-sensitive markets like India. India’s palm oil imports may drop to a five-year low as refiners shift to cheaper alternatives.
KUALA LUMPUR- Malaysia’s palm oil stocks are set to fall to 1.5 million metric tons by the end of February, their lowest level in nearly two years, as floods have hit production and the Ramadan festival has boosted demand, a senior regulatory official told Reuters.
The drop in inventories in the world’s second-largest palm oil producing country after Indonesia could support benchmark futures and sustain the commodity’s premium over competing oils.
Floods in eastern parts of the country have reduced palm oil production in both January and February, Ahmad Parveez Ghulam Kadir, director-general of the Malaysian Palm Oil Board (MPOB), said.
Widespread flooding has hit regions across Malaysia since November last year, displacing more than 90,000 people. Another wave of floods in January forced thousands from their homes in Sarawak and Sabah.
“This is the time where we will see buying increase, which I believe will keep prices stable and bring down stock levels,” he said.
The holy month of Ramadan starts at the end of this week. Palm oil consumption typically surges as Muslims use the oil to prepare meals to break their fast and during banquets to celebrate the Eid al-Fitr holiday that marks the end of the fasting period.
Malaysia’s palm oil stocks fell 7.55 percent in January from December to 1.58 million tons, the lowest level in 21 months due to a plunge in output.
Lower production has resulted in tight supplies, ensuring palm oil trades at a premium over rival soyoil and sunflower oil, he said.
Palm oil’s premium could lead to lower demand in price-sensitive markets such as India, but prices will remain stable until the supply situation improves, he said.
Despite difficulties so far this year, Malaysia’s production is likely to rise to 19.5 million tons in 2025, up from 19.34 million tons a year ago, due to increased labor supplies and ongoing improvements in agricultural practices, he added.
Meanwhile, palm oil’s share of India’s annual edible oil imports is set to drop below soft oils for the first time as its rising premium over soyoil and sunflower oil pushes refiners toward more affordable alternatives, the head of an industry body said.
Lower palm oil imports by India, the world’s biggest buyer of vegetable oils, could weigh on benchmark Malaysian palm oil prices and support US soyoil futures Boc2.
“Palm oil is getting pricey due to supply issues, so buyers are naturally shifting to soyoil and sunflower oil instead,” said Sanjeev Asthana, president of the Solvent Extractors’ Association of India (SEA), in an interview with Reuters.
The country’s palm oil imports in the 2024/25 marketing year ending in October 2025 could fall to as low as 7.5 million metric tons, the lowest in five years, said Asthana, who is also the CEO of Patanjali Foods Ltd
Palm oil is losing market share to soft oils, which are projected to account for a slightly larger volume of imports, he said.
Palm oil accounted for 56 percent of India’s total edible oil imports in the last marketing year, but in the first three months of the current year its share fell to 43 percent, the SEA data showed.
Palm oil has been trading at a premium over rival oils for the past few months as supplies from top producers Indonesia and Malaysia were affected by floods at a time when Jakarta has also moved to increase the tropical oil’s use in biodiesel .
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Source : Malay Mail
