CPO prices to remain stable between RM3,850 and RM4,050: MPOC
18/09/2024 (New Straits Times), Kuala Lumpur - Palm oil prices are expected to remain steady at RM 3,850 this month, despite approaching peak production season, according to the Malaysian Palm Oil Council (MPOC).
MPOC said in a statement that Malaysian palm oil production increased modestly by 2.8 per cent to 1.89 million tonnes in August 2024, while exports declined by 9.8 per cent to 1.52 million tonnes,
As a result, palm oil stocks in Malaysia rose to 1.88 million tonnes, the highest level in six months.
Although exports in August 2024 showed a month-to-month decline, there was a significant increase of 24.5 per cent year-over-year.
MPOC noted that from September to November 2023, Malaysian palm oil inventories ranged from 2.3 to 2.4 million tonnes, a level that is unlikely to be reached in 2024.
"A similar supply dynamic is developing in Indonesia, where palm oil stock levels fell to a 15-month low of 2.82 million tonnes in June 2024.
"Although production is projected to recover from August to November, the tight inventory, and the impending implementation of the B40 biodiesel programme are expected to keep palm oil prices supported," it said.
MPOC said tha the appreciation of the Malaysian Ringgit has contributed to the strengthening of palm oil prices in the European market.
In August, palm oil was priced US$5, US$27, and US$43 higher than sunflower oil, soybean oil and rapeseed oil respectively.
China's soybean oil stocks remained elevated at 1.03 million tonnes in August, with total edible oil stocks at 1.99 million tonnes.
Consequently, palm oil imports are likely to remain flat despite the upcoming Mid-Autumn Festival and Golden Week holidays in September and October.
"As the market anticipates a tighter palm oil supply in coming months, largely due to Indonesia's upcoming implementation of the B40 biodiesel programme starting in January 2025, palm oil prices are expected to remain stable in September," MPOC said.
The B40 programme is projected to consume around 30 per cent of Indonesia's palm oil production. Moreover, GAPKI forecasts a 5.0 per cent decline in production for 2024.
However, as palm oil is trading at a premium over soft oils in key markets such as Europe and China, imports are expected to remain flat, which will likely cap palm oil prices at RM 4,050.