Palm oil stockpiles in Malaysia, the world’s second biggest producer fell for a third straight month in March by 3.6% to 1.6 million metric tons – the lowest level since February 2011 according to Bloomberg. Output increased 11% to 1.42 million tons rebounding from the lowest output in 22 months as exports decreased 3% to 1.31 million tons – the lowest since July 2012. Output typically increases beginning in March however demand is expected to increase in the second quarter because of restocking by importers before the Muslim Eid festival in July. By September 30th, world stockpiles are expected to reach 9.8 million tons from 9.9 million tons a year earlier. Initiatives to boost biodiesel use in Indonesia and higher fuel blending rates indicate that consumption will increase by 1.6 million tons making Indonesia the highest-demanding palm oil country in the world. The possibility of an El Nino weather pattern developing in May could also keep palm oil prices elevated. If it materializes, El Nino could likely decrease grain and oilseed output in India, eastern Australia, Indonesia, Malaysia, and parts of Southeast Asia.
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