EU palm oil prices dip amid export woes and growing stockpiles
26/10/2023 (Mintec Global) - In recent developments as of 25th October, the Crude Palm Oil (CPO) CIF Rotterdam, as assessed by Mintec under the code CPOR, now stands at $884.50 per metric tonne, marking a significant decrease of $16.00 per metric tonne. This price decline is attributed to the increasing stock levels and a notable reduction in demand.
Export levels from 1st to 25th October have taken a hit, with exports dropping by 1% to 3% compared to September, according to market players. This is a sharp departure from previous estimates, where industry insiders had projected a 7% to 7.5% increase in exports for this month. The slump in demand from China, a major purchaser, has played a key role in this reversal. Chinese traders, cautious about the volatile domestic oil market, have adopted a 'wait-and-see' approach.
Rapeseed oil, along with other vegetable oils, has also seen a significant price drop over the week, adding to the downward pressure on palm oil prices.
Moreover, production estimates provided by market players to Mintec suggest a potential 3% to 6% increase in production for October compared to September. This has prompted sellers to offload surplus stocks, further weighing on palm oil prices. If these production estimates hold, the already high-end stocks are expected to increase even more, exceeding 2.313 million metric tonnes. This situation is anticipated to continue suppressing palm oil prices in the weeks to come.
Many industry participants are keeping an eye on production trends for the remainder of 2023, with expectations of continued stability. Unless a significant buying surge occurs, stocks are likely to remain at current levels, adding to the market's downward pressure.
Turning to China, the data reveals palm oil stocks of around 850,000 metric tonnes as of 20th October, which is notably high, even by Chinese standards. This suggests that China may prioritise the use of its existing supplies before considering further purchases, contributing to the prevailing bearish sentiment.
Despite this, there have been reports of palm oil trades to India with prices ranging from $820 to $847 per metric tonne. While exact volumes are undisclosed, more than 50,000 metric tonnes were likely sold to India over the past week. This, though not a game-changer, is significant as it indicates palm oil demand during this period of price decline.