KUALA LUMPUR (Reuters) – Malaysia’s palm oil inventories fell 6.3% at end-June from a month earlier as a leap in exports amid an easing of coronavirus curbs outpaced a surprise jump in production, official data showed on Friday.

Stockpiles at the world’s second largest producer eased to 1.90 million tonnes, according to data from industry regulator the Malaysian Palm Oil Board (MPOB). MYPOMS-TPO

Crude palm oil production last month rose to a 20-month high, growing 14.2% from May to 1.89 million tonnes, the MPOB data showed, the highest since October 2018. MYPOMP-CPOTT

“Production was 2-5% higher than earlier estimates. We are likely to see a stronger production trend until September,” Marcello Cultrera, institutional sales manager and broker at Phillip Futures in Kuala Lumpur.

However, June palm oil exports, including crude and processed palm oil, surged 24.9% from May to 1.71 million tonnes, the highest since August 2019, as countries restock on the edible oil after weathering lockdowns imposed to curb the spread of the coronavirus.

MPOB data showed June imports by top buyer India were 4.5 times the level of the previous month, while China’s imports rose 56%.

In particular, exports of crude palm oil alone jumped 159% after Malaysia cut its export tax to zero for the period from June to December, noted Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.

However, traders expect the pace of exports to slow down in July.

Benchmark crude palm oil prices FCPOc3, currently about 2,366 ringgit (£440.21) a tonne, should hold between 2,200 ringgit and 2,500 ringgit for the rest of 2020, said Azila Abdul Aziz, chief executive officer of Kenanga Futures.

“Nevertheless, the fear of a second wave of COVID-19 which could cause further undue stress on the global economy might limit the upside potential,” Azila said.

Concerns about a resurgence of U.S.-China trade tensions over Hong Kong national security law could also weigh on prices, she added.

Following is a breakdown of the Malaysian Palm Oil Board figures and Reuters estimates for December (volumes in tonnes):

June 2020 June 2020 poll May 2020* June 2019

Output 1,885,742 1,783,434 1,651,337 1,510,957

Stocks 1,901,021 1,935,571 2,029,579 2,410,828

Exports 1,709,752 1,650,000 1,368,746 1,397,140

Imports 48,841 40,000 37,101 101,250

*indicates revised figures by the Malaysian Palm Oil Board

Original article appeared on Reuters, 10 July 2020 here.