Stockpiles prompt cutbacks in palm oil output

Palm oil production in Malaysia, the biggest supplier after Indonesia, probably dropped the most in seven months in September after reaching a record in August. Futures climbed the most in more than a week.

Output slumped 11 percent to 1.81 million metric tons from an all-time high of 2.03 million tons, according to the median of seven estimates from planters, analysts and traders compiled by Bloomberg. Reserves were 2.05 million tons at the end of last month, the same level as a month earlier, the survey showed. Stockpiles surged 22 percent in August to the highest since March 2013, according to the Palm Oil Board.

Palm oil, used in food, cosmetics and biofuels, slumped 17 percent this year as supplies in Southeast Asia expanded, adding to a global cooking oil glut swelled by record US soybean crops. Malaysian output climbed 8 percent to 12.8 million tons in the first eight months from a year earlier, board data show. Output peaked in October each year in the past five years, except for 2012 when the high was in September.