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Palm Oil Faces Pressure By Rising Production And Weak Demand

Malaysian Palm Oil: futures bottomed around the MYR 3,700-per-tonne mark, moving closer to levels not seen since June 2021, pressured by rising production and weak export demand from Malaysia, as well as increasing inventories from top producer Indonesia.

According to cargo surveyors data, exports from the world’s second-largest producer during July 1-20 fell between 2% and 9.6% from the same period in June. On top of that, industry research group CGS-CIMB expects Malaysian palm oil stocks to rise by 21.4% monthly to 2 million tonnes in July due to weak demand and increasing output.

High levels of inventories in Indonesia are also adding to the bearish outlook. The top palm oil producer has removed a levy on vegetable oil exports until August 31st, attempting to clear the current high palm oil stockpiles and boost exports.

It also plans to implement a 35% palm oil mix in bio-diesel by the end of July and is considering cutting its palm oil export levy to encourage more shipments.

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