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W12: Weekly Palm Oil Update

Updated Mar 27, 2023
Tridge's global market analysts and country representatives take a deep dive into what happened during W12 in the global palm oil landscape. In summary, following a sharp decline in rival vegetable oils on March 22, Malaysian palm oil futures reversed course and dropped more than 3% to a 5-month low. The benchmark price for crude palm oil (CPO) in Malaysia has averaged around USD 915/MT so far in Q1 2023, which is significantly lower than the average price of around USD 1,175/MT in 2022. Malaysia has increased its reference price and kept its April export tax for crude palm oil at 8%. India's palm oil imports decreased by 30% In February to an eight month low as refiners sought to reduce stockpiles. Pakistan’s palm oil imports climbed by 9.87% during the first eight months of the current fiscal year compared to the same time during the previous year. Lastly, Africa’s palm oil sector is expected to see prices falling in 2023 as output rises.


World Vegetable Oil and Sugar Market on March 22: Palm Oil Price Lost 3% To 5-Month Low

Following a sharp decline in rival vegetable oils today, March 22, Malaysian palm oil futures reversed to drop more than 3% to a 5-month low. At its lowest point since October 14, the June 2023 delivery of palm oil contract on the Bursa Malaysia exchange dropped 121 ringgit, or 3.2%, to USD 819.1/MT. This futures contract was settled at USD 815.94/MT at the midday break. In comparison to the same period in February, Malaysia's palm oil exports increased by 30.4% to 929,274MT in the first 20 days of March 2023 from 712,740MT.

A 3.2% Drop In Rapeseed Prices Led to a 3.5% Drop in Palm Oil Futures

Soybean, canola, and palm oil quotes are still under pressure due to the 15% decline in global oil prices since the beginning of March and the continued decline in demand for vegetable oils, which has caused a sharp drop in their prices. Bursa Malaysia Derivatives listings are under pressure as a result of a 15% MoM decline in the price of Black Sea sunflower oil and a decline in EU rapeseed oil prices below palm oil prices. There, May palm oil futures have been declining over the previous three sessions, and yesterday they dropped 3.56% to a 5-week low of USD 845/MT (-6.5% for the week, +11% for the fortnight) in response to the weakening of the ringgit and the decline of the nearby vegetable oil markets.

World Vegetable Oil and Sugar Market on March 21, Increase Again After Three Consecutive Price Drops

The price of the palm oil contract for delivery in June 2023 increased 30 ringgit, or 0.79%, to 3,815 ringgit (USD 852.7/MT), on the Bursa Malaysia exchange. This futures contract closed at 3,826 ringgit (USD 854.97/MT) in the middle of the trading day. The upside was however constrained by a stronger ringgit, lower prices for soybean oil on the Chicago Exchange, and lower prices for vegetable oil on the Dalian Exchange. For holders of foreign currencies, the price of palm oil increased due to the ringgit's 0.22% increase against the dollar.


Africa’s Palm Oil Sector to See Prices Falling In 2023 as Output Rises

In 2023, the leading producers in Africa, led by Nigeria, may experience a slight increase in production at a time when the demand for agricultural products is anticipated to rise as China relaxes its Covid-19 limitations and India boosts imports. Globally, China and India are the two largest consumers of palm oil. Nigeria, Cote d'Ivoire, Cameroon, Ghana, Congo (Kinshasa), Sierra Leone, Angola, Guinea, Liberia, and Senegal are the top 10 producers of palm oil in Africa. Nigeria is the main producer of palm oil in Africa and ranks fifth in the world with a production of 1.4MMT. Then comes Cote d'Ivoire, which according to the most recent estimates produced 600,000MT of palm oil. One of the primary agricultural products for both nations is palm oil, and their governments are investing in expanding the industry.


Indonesia, Malaysia Send Aid of 100,000 Oil Palm Seedlings to Honduras

In order to assist the hundreds of Honduran farmers impacted by the hurricanes in 2020, Indonesia and Malaysia have provided 100,000 germinated oil palm seedlings. This initiative demonstrates dedication to cooperation and solidarity among nations that produce palm oil, he said in a statement made public on Monday. The governments of Indonesia and Malaysia have sent 20 thousand seedlings through the Council of Palm Oil Producing Countries (CPOPC), an intergovernmental organization for palm oil-producing countries.


Asian Crude Palm Oil Watch Q1 2023, Malaysia

The benchmark price for crude palm oil (CPO) in Malaysia has averaged around USD 915/MT so far in Q1 23, which is significantly lower than the average price of around USD 1,175/MT in 2022 but significantly higher than the price at the end of September 2022 of roughly USD 700/MT and the average price over the previous ten years of USD 730/MT. Market predictions of much higher biodiesel use, fewer exports from Indonesia, and the effects of heavy rains at the beginning of 2023 on output have all helped to maintain prices.

Malaysian Palm Oil Extends Losses to Clock Biggest Weekly Drop In Four Months

Following weakness in competing for edible oils, Malaysian palm oil futures on Friday, March 24, extended losses to a seventh session to record their largest weekly loss in more than four months. The benchmark palm oil contract FCPOc3 for June delivery on the Bursa Malaysia Derivatives Exchange fell 1.34%, to USD 795.53/MT. The contract hit its lowest closing level since October 4.

Malaysian Palm Oil Slips to More Than Six Months Closing Low on Weaker Rival Oils

Following declines in competing edible oils, Malaysian palm oil futures fell to a closing low of more than six months on Thursday. Investor caution as they awaited the U.S. Federal Reserve's remarks also impacted on sentiment. The benchmark FCPOc3 June delivery contract for palm oil fell 93 ringgit, or 2.54%, to USD 808.65/MT, marking its lowest closing price since October 4.

CPO Futures Slips Further, Tracking Losses in Rival Edible Oils in Malaysia

According to a trader, the crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives declined more on Thursday, March 23, following the declines in competitive edible oils as well as the price of crude oil. With the weakness in the Chicago Board of Trade (CBOT) soybean oil futures market, which was down by 1% during Asian trading hours after Wednesday's sell-off, CPO fell below USD 836.82 since October of last year. The Federal Reserve's dovish economic signals, along with the belief that OPEC+ will probably maintain output levels next month despite a recent price drop, all contributed to a decline in oil prices on Thursday.

Malaysia Keeps April Crude Palm Oil Export Duty at 8%

According to a circular posted on the Malaysian Palm Oil Board website on Thursday, Malaysia has increased its reference price and kept its April export tax for crude palm oil at 8%. The second-largest exporter of palm oil in the world came up with a reference price of USD 911.78/MT for April. The reference price for March was USD 839.16/MT. The March reference price was USD 839.16/MT. The export tax structure starts at 3% for crude palm oil in the USD 508.88-542.80/MT range. The maximum tax rate is set at 8% when prices exceed USD 780.28/MT.

Malaysian Palm Unchanged After Three Days of Losses

Tuesday, March 21, saw no change in the price of Malaysian palm oil futures despite previous gains due to bargain hunters and a stronger currency. Price pressure also came from forecasts of increased supply. On Tuesday, the benchmark June delivery price for palm oil on the Bursa Malaysia Derivatives Exchange rose 1.82% to settle at 3,785 ringgit (USD 846.76/MT). The contract dropped for three straight sessions, closing the prior day at its lowest level in almost seven weeks.

The Malaysian Palm Oil Council to Continue Engaging With EU in Demanding Changes to Its Deforestation Regulation

The European Union (EU) will continue to be contacted by the Malaysian Palm Oil Council (MPOC) to request amendments to the EU Deforestation Regulation (EUDR). Smallholders must be exempted from the EUDR, and the EU must promise that Malaysia won't be flagged as having a high risk of deforestation.  The move followed a protest held on March 15 by several hundred oil palm and rubber small farmers from the Federal Land Development Authority (Felda).

Malaysian Palm Oil Futures Is in a Volatile Position

According to the Dalian Exchange and Chicago Board of Trade, the Malaysian oil palm futures trade contract for June has increased today to USD 893.36/MT. But, it will be difficult to maintain at the current pace due to pressure from ongoing worries about weak global demand. India's imports of palm oil fell by 30% in February compared to the prior month, and stocks rose as a result of the high imports during November and January.


India’s Palm Oil Imports in February 2023 Fell to 8-Month Low

In February 2023, India's imports of palm oil decreased by 30% from January to a low of eight months as refiners sought to reduce stockpiles as inventories grew as a result of over-importing between October 2022 and January 2023. India, the top importer of vegetable oils, may reduce its imports of palm oil, which could impact the cost of Malaysian palm oil FCPOc3. The lowest level of palm oil imports into India since June 2022 was 586,000 tonnes last month, according to an average estimate from five merchants. While exports and production slowed in January 2023, Malaysia's palm oil inventories decreased to a five-month low in contrast to India.

India’s Vegetable Oil Import Forecast in 2022/23 Reaches 15 MMT

Vegetable oil imports into India are anticipated to increase from 14.15MMT to 15MMT in the year to October 2023. India anticipates an increase in palm oil imports this year, from 8.26MMT to 8.75MMT.


In Pakistan, Palm Oil Imports Grow 9.87 % In Eight Months

When compared to the imports during the same period the previous year, the country's imports of palm oil climbed by 9.87% during the first eight months of the current fiscal year. In addition, during the reviewed period, imports of more than 2.151MMT of palm oil valued at USD 2.681B were made, compared to imports of over 2.037 MMT valued at USD 2.440B during the same time last year.

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