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Malaysia’s end-Dec palm oil stocks seen falling to four-month low

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KUALA LUMPUR — Malaysia’s palm oil

inventories at end-December likely shrank to the lowest in four

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months as production and exports slowed, a Reuters survey showed

on Thursday.

Stockpiles fell 5.3% from the month before to 2.17 million

tonnes, the lowest since August, according to the median

estimate of nine traders and analysts polled by Reuters.

Output fell for a second consecutive month as tropical

storms and heavy flooding disrupted harvesting and hit supply

lines across the world’s second-largest producer.

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Production declined 3% from November to 1.63 million tonnes,

the smallest since July.

Exports also fell 1% to 1.5 million tonnes, with cargo

surveyors indicating a slump in shipments to key market China.

Demand from China has declined in recent years due to strict

COVID-19 containment measures, but consumption is expected to

slowly recover this year as Beijing shifts away from its

stringent policies.

However, raging COVID-19 infections in the world’s most

populous nation have raised doubts of a recovery in the near

term.

Meanwhile, Indonesia’s move to limit export volumes and

increase the use of palm oil as biofuels domestically will

tighten global supplies and support prices.

A Kuala Lumpur-based analyst said in January traders will be

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eyeing Chinese New Year demand and improvements in Malaysia

production, the development of South American soybean planting.

The Malaysian Palm Oil Board (MPOB) is scheduled to release

its data on January 10.

Breakdown of December estimates (in tonnes):

Range Median

Production 1,800,000-1,512,700 1,630,000

Exports 1,563,300-1,485,000 1,502,554

Imports 0-60,000 50,000

Closing stocks 2,340,000-1,966,700 2,168,000

* Official stocks of 2,288,473 tonnes in November plus the above

estimated output and imports yield a total December supply of

3,968,473 tonnes. Based on the median of exports and closing

stocks estimate, Malaysia’s domestic consumption in December is

estimated to be 297,919 tonnes.

(Reporting by Mei Mei Chu; Editing by Ed Davies)

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