By BLOOMBERG

Palm oil inventories in Malaysia climbed to a record 3.01 million tonnes at the end of November as production in the world’s second-largest grower shrank less than exports, according to data released by the Malaysian Palm Oil Board.

The stockpiles topped the 2.99 million tonnes predicted in a Bloomberg survey, and could bring added pain to the commodity that’s facing its biggest annual slump in six years.

Stockpiles have risen for a sixth straight month. The increase could further pressure benchmark futures in Kuala Lumpur, which have tumbled 20% this year and are trading near three-year lows.

The last time reserves were near these levels was in November 2015, when they hit 2.91 million tonnes.

“While the report is bearish, inventories at a record high was within market expectations,” according to Sathia Varqa, owner of Palm Oil Analytics in Singapore.

However, the market may now focus on year-end inventories, which are likely to stay above three million tonnes, he said.

Production fell 6.1% to 1.85 million tonnes, according to the board’s data, below 1.94 million tonnes estimated in the survey. That’s the first drop since June and could mean that palm oil’s high output-cycle peaked in October.

Investors will also wait for December exports and production numbers, as well as Malaysia’s B10 biodiesel programme, Varqa said.

Malaysian exports may be sluggish this month because of lower Indonesian prices, he said.

Exports dropped 13% to 1.38 million tonnes, the lowest since August and below the survey estimate of 1.46 million tonnes.

Indonesia last week signed a rule to cut its export levy on crude palm oil to zero if prices fall below US$570 (RM2,394) a tonne, making Malaysian prices less competitive.

Exports in the first 10 days of December fell 2.5% from a month ago to 299,527 tonnes, according to AmSpec Agri. Another cargo surveyor Intertek Testing Services (M) Sdn Bhd reported a 0.8% decline.

The world’s most-used edible oil is having a horrendous year as a powerful mix of drivers pushes down prices — from a slump in petroleum costs to sluggish export demand and allegations that expanding plantations have destroyed orangutan habitats.

Still, there could be hope for crude palm oil. Market participants may view the inventory confirmation with relief because of the idea prices are at the bottom, said Varqa.

Prices have historically bottomed around when inventories peak, as was the case in 2015, according to Ivy Ng, regional head of agribusiness at CIMB Investment Bank Bhd.

Palm oil futures for delivery in February ended 0.2% lower at RM1,994 per tonne on Bursa Malaysia Derivatives Exchange by the midday break yesterday. A Bloomberg survey forecasts prices to end the year at RM2,000. — Bloomberg