MALAYSIA – Data released by the Malaysian Palm Oil Board (MPOB) reveals the country’s palm oil stocks increased by 1.85% to 1.74 million tons in April 2024, in the first month-to-month increase in six months. 

The data showed that palm oil stocks exceeded predictions by a Reuters survey, which predicted Malaysia’s palm oil stocks would be 1.68 million tons in April.  

Crude palm oil production also increased by 7.9% to 1.5 million tons in April compared to March. 

However, palm oil exports declined 6.9% in Malaysia to 1.23 million tons in April.  

Palm oil imports increased by 58.8% from March 2024 and April 2024 to 34,760 tons.  

MPOB’s data aligned with Reuters’ April prediction of 1.22 million tons of palm oil exports. 

The release of the data had a shock effect on the palm oil market, with futures closing at a one-week low the week before. 

The market shock was also due to the lower prices of rival edible oils and controversy in countries like India, where snack companies faced backlash over preferring cheaper, unhealthy palm oil over other edible oil options.  

Exports have also declined due to proposed bans in the EU on commodities linked to deforestation. 

The Malaysian government described the law as discriminatory, advocating for its non-implementation. 

Palm oil’s market performance is mainly affected by price fluctuations, as the product competes for market share with other edible oils.  

The decrease in palm oil exports did not surprise many players since stocks in other major consumers fell significantly- for example, China’s palm oil imports fell 17.7% in April.  

The increase in palm oil stocks surprised market analysts, who expected stock volumes to mirror Reuters’ forecast.  

This behavior is attributed to the country’s recent adoption of ‘orangutan diplomacy’ in its business relationships with palm oil-importing countries.  

The strategy is meant to appeal to the EU and other major palm oil importing countries that have voiced concerns over the environmental effect of palm oil production in Malaysia. 

The strategy would give orangutans to these countries as gifts to show Malaysia’s commitment to environmental conservation.  

The long-term effect of the strategy is yet to be observed. 

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