Analysts on Tuesday said that they expect Malaysia’s palm oil stockpiles to remain high in the near term after the country’s July stockpile hit a 19-month high of 2.11 million tonnes.

RHB Investment Bank said in a note that it expects Malaysia’s palm oil output to continue ramping up towards the peak season.

The demand should also improve, as crude palm oil prices are now at a large discount compared with their competitors.

“Going forward, we expect stock levels to continue picking up as production moves towards peak output, staying above the two million tonnes mark,” said the research house.

It is also believed that the CPO prices would taper off in the third quarter, before picking up in the fourth quarter.

Meanwhile, Hong Leong Investment Bank stated in a note that the uptrend in palm oil stock levels is likely to be sustained into August.

This would be underpinned by seasonally higher output and weaker price competitiveness, which is likely to cap demand for palm oil.

Maybank Investment Bank also stated that it still believes both Malaysia and Indonesia are likely to see improved palm oil output in 2025.

“With output anticipated to remain strong the next two to three months, CPO prices will likely soften in the near term in order to stimulate demand,” said the research house.

(Xinhua/NAN)