Malaysia end-Dec palm oil stocks slip to 4-month low as output tightens

HIghlights:

• End-Dec stocks declines to smallest since August
• Output tightens for second month after monsoon
• Exports fell more than expected
• Updates with milestones, details, quotes

Malaysia's December palm oil end-stocks fell to the lowest since August as widespread flooding hit production during the year-end monsoon season, Malaysian Palm Oil Board (MPOB) data showed on Tuesday.

Inventories in the world's second largest exporter fell 4.09% to a four-month low of 2.19 million tonnes, MPOB data showed.

Crude palm oil production fell for a second consecutive month after heavy storms disrupted output during the seasonally low-harvest months. It shrank 3.68% from November to 1.62 million tonnes, the lowest since July. 

Supply was in line with most surveys but demand levels were worse than expected, said Marcello Cultrera, director at commodities consultancy Apricus 8 Pte Ltd in Kuala Lumpur.

Palm oil exports ticked down 3.48% to 1.47 million tonnes while imports were virtually unchanged, the MPOB data showed. 

The decline in exports was likely due to a slowdown in shipments to key market China, according to cargo surveyors' data published last month. 

Raging coronavirus infections in China, the world's most populous nation, have raised doubts of a speedy demand recovery led by a shift away from its strict "zero-COVID" regime.

Many parts of China are already past their peak of infections, Chinese state media reported, with officials further downplaying the outbreak's severity despite international concern about its scale and impact.

"The focus now is on January production versus the current imploding demand," Cultrera said. 

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

*indicates revised figures by the Malaysian Palm Oil Board