Malaysian palm oil stockpiles balloon to record on output surge

Palm oil inventories in Malaysia likely swelled to a record last month, buffering supplies of the world’s most-used vegetable oil as an intensifying El Niño threatens to disrupt production in the coming year.

The burgeoning supplies could deepen a recent slump in prices, as traders also await a ramp-up in exports to major markets like India that would help draw down the massive stockpiles.

Though production typically peaks in September and October, higher-than-expected output growth has elevated inventories, meaning prices will likely stay under pressure at 4,300 ringgit ($1,052) to 4,500 ringgit a ton, said Jacquelyn Yow, regional head of plantation research at CGS International.

"It’s a shock to the market that stockpiles would grow so suddenly,” she said.

Benchmark futures in Kuala Lumpur slid from their September peak of 5,049 ringgit and were trading near 4,535 ringgit on Monday.