(Updates with price decline in first paragraph.)
Dec. 10 (Bloomberg) -- Palm oil inventories in Malaysia, the second-largest producer, climbed the most in 14 months in November as exports decreased more than analysts’ forecast. Futures declined to a one-week low.
Inventories advanced 7.2 percent to 1.98 million metric tons from a month earlier, the biggest gain since September 2012, while exports lost 8.7 percent to 1.52 million tons, the largest drop since February, Malaysian Palm Oil Board data showed today. The median of estimates in a Bloomberg survey was 1.96 million tons for reserves and 1.57 million tons for exports. Production fell 5.6 percent to 1.86 million tons, the first drop since February and compared with 1.92 million-ton prediction in the survey.
Futures in Kuala Lumpur are heading for the first annual gain in three years after entering a bull market last month on speculation that output from top supplier Indonesia may decline for the first time since 1998. Prices are set to extend the rally on the drop in supply and as biofuel mandates expand globally, according to Dorab Mistry, director at Godrej International Ltd.
“Unless prices come down, exports are not going to increase,” Gnanasekar Thiagarajan, a director at Commtrendz Risk Management Services Pvt., who expects stockpiles to increase to 2 million tons this month before starting to taper off because of a seasonal drop in output.
Palm oil futures ended 0.3 percent lower at 2,638 ringgit ($822) a ton on the Bursa Malaysia Derivatives, the lowest close for most-active futures since Dec. 3, trimming this year’s gain to 8.2 percent. Reserves last month were 23 percent lower than the 2.57 million tons in November 2012.
Shipments from Malaysia fell 20 percent to 378,579 tons in the first 10 days of December from the same period last month, surveyor Intertek said today.
Production of the oil used in everything from candy to biofuel is typically highest from July to October because of growing cycles and tapers off from November with January and February usually recording the lowest output.
--Editors: Ovais Subhani, Jake Lloyd-Smith