Decrease in production, exports and stocks of palm oil in Malaysia supports prices for sunflower oil

In its latest report, the Malaysian Palm Oil Board (MPOB) lowered its estimate of oil production and stocks in Malaysia by more than analysts expected, which led to an increase in quotations.

Thus, according to the report:

• palm oil stocks in January decreased by 7.6% to a 21-month low of 1.58 million tons,
• production decreased by 17% to 1.24 million tons compared to December
• exports decreased by 13% to 1.17 million tons.

Stocks of palm oil in Malaysia declined for the fourth consecutive month, which reduces the potential for exports and forces buyers to switch to buying cheaper soybean and sunflower oil.

April futures for palm oil on the Bursa exchange in Malaysia yesterday rose 2% to 4595 ringgit/t or 1029 $/t (+5.2% for the week, +8.9% for two weeks).

Growth was limited by the fall in export demand from India and China, but traders hope to increase demand in the near future, which will support prices.

Exports of palm oil products from Malaysia in the period February 1-10, according to the surveyor Intertek Testing Services decreased compared to the corresponding period in January by 3.9%, and according to estimates of AmSpec Agri Malaysia increased by 6.4%. This discrepancy in statistics has a negative impact on prices.

amid improving prospects for the soybean crop in Brazil, the March futures for soybean oil in Chicago for the week fell by 1.7% to 1007 $/t, but are trading 0.6% lower than a month ago.

According to Trading Economics, the average price of sunflower oil for delivery to customers during the week increased by 1.6% to 1309 $/t (+3.9% for the month) amid declining supply and increased demand. However, in the near future we should not expect an increase in demand for sunflower oil from China, which continues to import cheap soybeans from Brazil.

In 2024, China reduced the imports of sunflower oil by 39% from 1.5089 mln tonnes to 1.0853 mln tonnes compared to the previous year due to the increase of Brazilian soybean processing.

Tags: sunflower oil, prices