KUALA LUMPUR : Malaysia's palm oil inventories at the end of April are forecast to drop to their lowest level in 11 months as domestic use rises amid flat production, a Reuters survey showed on Friday.
Output in the world's second-largest producer is seen expanding 0.9 per cent to a three-month high of 1.3 million tonnes. Unfavourable price spreads between palm and soft oils would also limit exports in May and might lead to a build-up in stocks, said Nagaraj Meda, managing director at TransGraph Consulting.
"With Indonesia easing the domestic market obligation policy, prices of Indonesian palm olein are trading at a steep discount of $50-60 per tonne over Malaysia, which would limit exports from Malaysia," Meda said.
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