KUALA LUMPUR: Malaysia’s palm oil inventories in end-August likely swelled above 2 million tonnes for the first time in more than two years lifted by a jump in production.

Stockpiles jumped 14.5% from the month before to 2.03 million tonnes. The highest since April 2020, according to the median estimate of nine traders and analysts polled by Reuters.

Output in the world’s second-largest producer climbed 8% to 1.7 million tonnes, hitting a 10-month peak.

August, the start of the peak production season, is on course to be the best production month. Buoyed by rains offering ample soil moisture and boosting yields, said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.

“September production rise will see a slowdown as yields take time to recover,” he added.

Meanwhile, exports eased 0.14% to 1.32 million tonnes amid increasing price competition with larger rival Indonesia.

Estimates by cargo surveyors ranged from a decline of 3% to a 1.6% rise. As shipments to China and the European Union rose but key buyer India slowed purchases.

The rising inventories have been reflected in the price trend in August, said William Simadiputra, an analyst at DBS Vickers Securities in Jakarta.

Malaysia’s benchmark crude palm oil contract fell 3.4% in August, its fourth consecutive monthly decline

The Malaysian Palm Oil Board (MPOB) is scheduled to release its data on Sept. 12.

Breakdown of August estimates (in tonnes):

Production Range:1,650,000-1,809,594. Median: 1,699,445
Exports Range: 1,229,700-1,400,000. Median: 1,320,000
Imports Range: 0-260,000. Median: 150,000
Closing stocks Range: 1,850,000-2,132,388. Median 2,030,000

Official stocks of 1,772,794 tonnes in July plus the above-estimated output and imports yield a total August supply of 3,622,239 tonnes. Based on the median of exports and closing stocks estimate, Malaysia’s domestic consumption in August is estimated to be 272,239 tonnes.