In W19 in the palm oil landscape, Malaysian palm oil futures extended gains for a fourth consecutive session on Monday, May 8, surging more than 4% to its highest closing in nearly three weeks, as forecasts of a sharper decline in April output triggered supply concerns. The benchmark palm oil contract FCPOc3 for July delivery on the Bursa Malaysia Derivatives Exchange increased 1.83%, to USD 826.83/MT during early trade, hitting its highest since April 20. Malaysia's palm oil inventories dropped to their lowest level in 11 months, by 10.54% to 1.5 MMT in April after production and exports declined more than expected. On Wednesday, May 10, Malaysian palm oil futures declined 2.78% to USD 834.50/MT, despite an earlier-than-anticipated decrease in April production and stockpiles, as investors shifted focus to rising supply from top producer Indonesia. However, on Friday, the benchmark palm oil contract for July delivery closed 1.19%, higher at USD 822.10/MT as traders covered short positions ahead of shipment data due on Monday.
In 2022, the EU agreed on a new law that requires companies to ensure that commodities sold in the EU do not come from deforested land. Therefore, Malaysia will meet with the leaders of EU member states in Brussels, Belgium, at the end of May to ensure that products made from palm oil are not prohibited from entering the EU after the EU Deforestation-Free Regulation (EUDR) comes into effect. Malaysia's top palm oil importers include India, China, Turkiye, the Netherlands, Kenya, the Philippines, Pakistan, Japan, Saudi Arabia, and Iran, which together purchased 9.8MMT palm oil products from Malaysia in 2022, accounting for 62.4% of the nation's palm oil exports. The government of India has been encouraged by oilseed growers to increase the import duty on palm oil, to support the thousands of local farmers who are suffering due to a collapse in domestic rapeseed prices. Rapeseed prices have decreased to USD 54.71-57.15/100kg, less than the USD 66.27/100kg minimum support price set by the government. India's imports of palm oil dropped 30% MoM to 510,094MT in April, reaching a 14-month low as a premium on rival light oils prompted buyers to switch to sunflower oil and soybean oil. The big drop in palm oil imports by India, the world's biggest importer of vegetable oils, could put further downward pressure on palm oil prices, which are already trading near a seven-month low.
