Global
Global Quotes for Palm Oil Fell by 6%, While Soybeans Rose by 3.7% on December 12
Palm oil and soybean oil were moving in opposite directions on December 12 due to a sharp drop in oil prices and global demand. Soybean oil futures on the Dalian Stock Exchange in China declined by 2.06%, and palm oil futures plummeted by 4.22%, which was the largest drop since the end of September. Under downward pressure from oil prices and Chinese demand, February palm oil futures on Bursa Malaysia plummeted 6.36% yesterday to reach their lowest level since October 14 at USD 847.53/MT. Even the increase in Malaysian shipments of palm oil from December 1–10 by 5.6–14.3% compared to the same period in November did not support them.
Europe
EU Palm Oil Use to Decline Significantly by 2032
The European Commission predicts that within the next ten years, the proportion of palm oil in biodiesel and food in the European Union will drastically decline, causing a sharp decline in imports. By 2032, only 9% of all biodiesel would be produced using palm oil, down from an average of 23% between 2019 and 2021. Vegetable oils were anticipated to be used in food at a rate of 10.6 MMT in 2032, up 2.9% from the average usage between 2020 and 2022. Rapeseed oil would increase by 12.6%, and sunflower oil would increase by 27.5%, while the consumption of soybean oil and palm oil would both decline by 35.7%.
Indonesia
Export Levies Reapplied on the Palm Oil Sector in Indonesia
Since November 16, the government has again imposed export taxes on palm products. The secretary general of the Indonesian Palm Oil Producers Association (Gapki), stated that since the price of palm oil has improved, palm oil entrepreneurs have had no issues with this. The Rotterdam price of palm oil was below USD 900/MT before this, and in W50, the price reached USD 1,000/MT. Earlier, the goal of the exemption from export levies was to increase both CPO exports and the domestic price of fresh fruit bunches (FFB).
Malaysia
Mistry Predicts a Jump in Palm Oil Price in Malaysia on Indonesian Biofuel Mandate
Lower reserves in Malaysia and Indonesia's mandate to use more palm oil for biofuel production will support tropical oil in the coming months. Only if the situation in Ukraine comes to an end, the most consumed cooking oil may trade between USD 790.87 and 129.82/MT between now and the end of May, according to Mistry, who has been trading palm for almost 40 years. On December 16, Friday, palm oil futures, which had just reached a two-month low, finished 1% higher at USD 885.32/MT. Late in September, the price of vegetable oil fell to USD 753.81/MT, the lowest level since early 2021. Additionally, as labor shortages subside, Malaysia will produce close to 19MMT of palm oil in 2023. Only 1.5MMT more will be produced in Indonesia than this year.
Palm Drops Due to Soft Export Data, Weaker Rival Oils
After two straight days of increases, Malaysian palm oil futures fell on December 15, Thursday, as reduced exports in the first half of the month and weaker rival oil weighed on prices. On the Bursa Malaysia Derivatives Exchange, the benchmark palm oil contract for February delivery dropped 1.92% to close the afternoon session at USD 877.46/MT. Earlier, palm prices experienced a more than 5% gain over the previous two sessions as Malaysian palm oil stockpiles decreased for the first time in six months.
Palm Price Jumps More Than 4% On Lower Stocks, Stronger Crude and Soy Oil
Smaller-than-expected inventories, a weaker ringgit, and firmer crude oil and soy oil prices supported the market as Malaysian palm oil futures gained on Tuesday, December 13, posting the greatest daily increase since November 1. By afternoon closing, the benchmark FCPOc3 palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange had increased 4.01% to USD 878.22/MT. The contract's Monday decline was the largest daily decline since September 28 at 6.36%.
Malaysia’s Palm Oil Is Deforestation-Free but the EU Ban May Impact Smallholders
Although Malaysia's palm oil and palm oil products are deforestation-free, the industry, particularly smallholders, may be impacted by increased administrative and production expenses as a result of the new European Union (EU) import ban. Additionally, this ban could increase the administrative burden and raise the cost of production for palm oil compared to domestically produced rapeseed oil and sunflower oil. There is discrimination in this situation because other crops like rapeseed and sunflower are not targeted. Smallholders may find it difficult to comply and end up being shut out of the EU market.
Palm Oil Price Drops on December 12 as a Sharp Decline in Rival Oils Weigh
Even though statistics showed firmer palm oil exports for the first 10 days of December, Malaysian palm oil futures fell on Monday, December 12, following weakness in competing oils. Early trading saw a loss of 4.51% to USD 863.12/MT for the benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange. Palm oil is impacted by changes in the prices of related oils as they compete for a share of the global vegetable oil market. Furthermore, from December 1 to 10, exports of Malaysian palm oil increased by 5.6% MoM.
Malaysia’s End-November Palm Oil Stocks Fall for the First Time in Six Months
At the end of November, Malaysia's palm oil stockpiles decreased for the first time in six months as a result of a decline in output and a slight increase in exports. According to the Malaysian Palm Oil Board, stockpiles in the second-largest producer in the world decreased by 4.98% from a three-year high in October to 2.29MMT. This is less than what the predicted stockpiles at 2.39MMT would be. Due to flooding and severe rains in the Southeast Asian country, crude palm oil production decreased by 7.33% to 1.68MM.
India
Palm Oil Imports to Top Buyer India Surge on Discount to Rivals
India, the largest consumer of palm oil in the world, increased imports of the product by 29% MoM, in November as local refiners profited from hefty discounts on rival soybean oil and sunflower oil. 1.14MMT worth of imports was made last month, more than twice as much as in 2021. Increased imports from India would boost benchmark Malaysian palm oil prices, which have almost halved from this year's record highs, and assist leading producer Indonesia in reducing its stocks. Buyers placed the majority of their orders for shipments in November in October, when soy oil was roughly USD 500/MT more expensive than palm oil because Indonesia was attempting to reduce its stockpile, according to dealers. Sunflower oil imports increased by 8.8% to 157,709MT last month, while soy oil imports decreased by 31% to 229,373MT.
Nepal
The first four months of the current fiscal year saw a steep fall in exports of palm oil and soybean oil, two commodities that had been providing Nepal with significant export revenues during the previous few years. From mid-July to mid-November, palm oil exports fell 47.3% from the same time last year. Exports of palm oil decreased to USD 75.28M during the review period from USD 143M in 2021. The sharp drop in exports was brought on by a decline in the demand for edible oil on the global market.
