Indonesian palm oil stocks have stayed at normal seasonal levels following a surprising 15% increase in June production that exceeded market expectations.

Initial estimates suggested potential stock tightness

Market analysts, including Vesper, had initially estimated Indonesian palm oil stocks could drop to around 2 million metric tons in June. These projections were based on very strong export demand and increased domestic consumption patterns observed through May.

GAPKI data reveals production increase above expectations

In a surprising move, GAPKI reported total Indonesian palm oil production for June at 5.288 million metric tons, a 15% increase from the previous month and around 12% above expectations.

This production surge led to ending stocks in June of around 2.5 million metric tons, compared with the initial estimate of 2 million metric tons. Exports were very close to expectations, at 3.6 million metric tons versus 3.4 million metric tons, as was consumption, at 2.072 million metric tons versus 2.1 million metric tons.

This surprised some market participants whose expectations were aligned with the initial forecasts, while others confirmed the strong growth reported by plantations during that period.

Stock levels normalize

The higher-than-expected production suggests that July ending stocks were likely above 2 million metric tons, with some plantations reporting their estimates at 2.3–2.4 million metric tons. This brings stock levels to the normal range, usual for this period of the year.

This represents a significant difference from the initially estimated potential tightness for Indonesia, the world’s largest palm oil producer.

Export performance remains strong

Indonesia’s export performance stayed robust, with June shipments reaching 3.6 million metric tons and July at around 3.2 mmt. These export figures include oleochemical exports, demonstrating continued strong international demand.

Regional stock build-up continues

While Indonesian stocks have normalized, importers continue building inventory. India’s total vegetable oil stocks reached 945,000 metric tons in July, while Chinese vegetable oil stocks hit 2.7 million metric tons – 6% above the two-year average. Palm oil stock build-up in both markets could continue through August and September.

This article is part of our weekly vegetable oil market analysis. For the full analysis go to: https://app.vespertool.com/market-analysis/2196?commodity=vegetable-oil