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Malaysian palm inventories dropped to an 11-month low during February as poor weather spoils crop harvest. Palm harvest in the country was impacted by the El Nino effect that reduced palm production and increased the price of palm products. The Malaysian Palm Oil Board has planned to disclose official data within March 10.

Stockpiles during February dropped 8.7% to 2.11 million metric tons from January, according to the average data result collected by Bloomberg survey. Palm production fell 3.5% to 1.09 million tons, the lowest since the period 2011 January. The poll data also showed that palm oil exports dropped 14% to 1.1 million tons during the reporting period.

Olam International, a commodity trader in Singapore, expects the second largest palm producer to record a further drop in palm oil inventories as the El Nino impact is set to worsen the production fall. Futures in Malaysia swelled as high as in a period of 21 months during February, but lost its momentum due to poor demand from consumers. According to James Fry, chairman of LMC International, palm production in Southeast Asia may face the horrible El Nino effect since 1997 to 1998.

Bloomberg quoted Voon Yee, an expert at Kenanga Investment Bank, who said that production must be soft near April and that stockpiles must decline further in the coming few months. Palm futures for May delivery increased as high as 1.4% on Bursa Malaysia Derivatives, the highest daily profit since February 12.

Weak demand from China and India curbed Malaysia's palm export in February, HELLENIC SHIPPING NEWS said quoting a Reuters survey. Malaysian palm shipments are anticipated to fall 14% to 1.10 million tonnes. According to an East Malaysian trader, there will not be much changes in palm exports to China in March, but there are opportunities for more exports during April.

Reuter's poll also predicts February palm production in Malaysia to drop 5% to 1.07 million tonnes, the lowest since January 2011. The average poll figures denote domestic palm consumption of 221,186 in the previous month.

According to Palm Oil Refiners Association of Malaysia (PORAM), the nation have to scrap duty rates on export of palm oil yields in order to boost refining division. According to Malaysian refiners, Indonesia government executes a higher duty rates on crude palm oil export than refined palm yields. As a result of this approach, crude palm oil producers sell their products to local refiners and maintain a low costs. In 2015, PORAM summoned the Indonesian government to fix a common export duty for crude palm oil in order to aid its refiners to enhance their market share, as reported by BORNEO POST online.

Malaysian refiners are trying hard to uplift the country's palm product inventories amid global crises. Refiners are more worried as their Indonesian counterparts are winning the battle for foreign palm market.