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Malaysia's palm oil reserves climb to six-month high on output
[KUALA LUMPUR] Palm oil inventories in Malaysia, the world's biggest producer after Indonesia, climbed in May to the biggest since November as gains in production muted the impact of a surge in shipments.
Stockpiles expanded 2.5 per cent to 2.24 million metric tons from April and were up 22 per cent from a year earlier, Malaysian Palm Oil Board data showed. The median estimate in a Bloomberg survey was for a decline to 2.12 million tons.
Production rose 6.9 per cent to 1.81 million tons, the highest since October, and exports jumped 37 per cent to 1.61 million tons, the biggest gain since March 2003, data showed.
The increase in reserves may curb a rally in futures which reached a three-month high this week. While output in the first five months was 2.8 per cent less than a year earlier, shipments fell 8 per cent in the same period, boosting inventories for a third straight month.
"Stockpiles still kept building up, which means that production is still" rising, Chandran Sinnasamy, executive director at LT International Futures Sdn. in Kuala Lumpur, said by phone. Exports will drop 7 per cent to 10 per cent in June from a month earlier as importers may have piled up enough supplies for the Ramadan festival, he said.
Futures advanced to RM2,362 a ton on June 8, the highest price since March 5, and traded at RM2,292 on Bursa Malaysia Derivatives in Kuala Lumpur on Wednesday.