Palm Oil Price Expected To Remain Stable At RM3,850 In September: MPOC
August saw Malaysian palm oil production increase modestly by 2.8% to 1.89 million tonnes, while exports declined by 9.8% 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% year-over-year.
The Malaysian Palm Oil Council said it expects palm oil prices to remain steady at RM 3,850 in September, despite approaching peak production season. 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.
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 USD 5, USD 27, and USD 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. The B40 programme is projected to consume around 30% of Indonesia’s palm oil production. Moreover, GAPKI forecasts a 5% 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.
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