Global

Global Market for Palm Oil on January 13, 2023

Due to the rising ringgit, poor demand, and suggestions from investors, the price of Malaysian palm oil futures opened the session today, January 13, and continued fluctuating near the lowest level in three weeks. Additionally, exports to the European Union may be prohibited by the Malaysian government. Early trade on the Bursa Malaysia exchange saw a decline of 47 ringgit, or 1.2%, to USD 891.56/MT of palm oil contract for March delivery. This futures contract was settled at USD 889.5/MT at midday. Prices decreased by 4.8% during the entire W2. 

In 2023, palm oil production will continue to be constrained in the world's largest producers, such as Indonesia and Malaysia, due to the anticipation of higher demand. Prices for palm oil decreased 0.7% on the Dalian Stock Exchange. The price of soybean oil decreased 0.5% on the Chicago Mercantile Exchange. When competing for market share in the global vegetable oil industry, palm oil prices are influenced by relevant oil prices.

World Market for Palm Oil on January 11

Due to a steep decline in January shipments, Malaysia's palm oil futures entered the session today, January 11, at a 3-week low. The Bursa Malaysia Exchange's March palm oil contract dropped 76 ringgit, or 1.91%, to USD 893.46/MT the lowest price since December 23. This futures contract was closed at USD 893.39/MT during the mid-day break. Due to the slowdown in shipments to India, Malaysia's exports in the first 10 days of January 2023 fell by 49–51% MoM compared to the same period in December 2022. Prices for palm oil decreased by 2.1% on the Dalian Stock Exchange. On the Chicago Mercantile Exchange, where palm oil competes for market share, its price is influenced by the relevant oil price as it competes for share in the global vegetable oil market.

Sunflower Oil Prices Remain Under Pressure Due to Falling Palm and Soybean Oil Prices

On the Malaysian exchange, March palm oil futures dropped 0.96% to USD 918/MT yesterday as a result of traders' anticipation that the report's data would show lower export figures and greater estimates of Malaysia's palm oil reserves. Therefore, the demand price of sunflower oil with delivery to customers in December decreased from USD 1,350 to USD 1,245/t CIF amid increased supplies from Ukraine and the Russian Federation.

The World Vegetable Oil Market on January 9, 2023

At the start of the session, the price of a contract for palm oil on the Bursa Malaysia exchange for delivery in March 2023 dropped by 39 ringgit, or 0.96%, to USD 918.31/MT. This futures contract was unchanged at USD 914.93/MT at the mid-day break. The ringgit increased by 0.66% in value terms, therefore, palm oil becomes less attractive to holders of foreign currencies as the ringgit strengthens. As production and exports slowed in December, stockpiles dropped to a four-month low but remained high at 2.17MMT down 5.3% MoM.

Indonesia

Indonesia Cuts Palm Oil Exports to Ensure Supply at Home

Indonesia, the world's largest producer of palm oil, will reduce exports of the product as it tightens regulations, requiring businesses to hold greater stocks domestically. According to the Director General of Foreign Trade at the Indonesian Trade Ministry, the government reduced the amount producers can export to six times the amount required for domestic sales, down from eight times at present. Additionally, January 1, 2023, was the new change's effective date.

Jokowi and Anwar Agree to Fight Discrimination Over Palm Oil

A number of agreements concerning palm oil have been made between the governments of Malaysia and the Republic of Indonesia. The agreement was announced by Indonesian President Joko Widodo and Prime Minister of Malaysia Anwar Ibrahim on Monday, January 1, 2023, at the Bogor Presidential Palace in West Java Province. In order to expand the market for palm oil and combat prejudice against it, these two countries also decided to intensify their collaboration through the Council of Palm Oil Producing Countries (CPOPC).

Malaysia

Malaysia Could Stop Exporting Palm Oil to Europe

Due to a new EU rule, one of the largest producers of palm oil in the world, Malaysia, has threatened to stop exporting to Europe. The new regulations prohibit the entry of palm oil into the EU if it cannot be proven that the production did not damage the forests. The raw materials minister of Malaysia said that Malaysia and Indonesia would talk about the innovation and urged the CPORS to unite in opposition to "baseless accusations" made by the EU and the US. To combat the new EU requirements, suppliers will be prepared to bring in foreign experts. If the EU keeps posing more and more challenges, another choice would be to just cease exporting to Europe and concentrate on exporting to other countries.

Palm Oil Export Earnings to Fall 24% To USD 23.75B in 2023 Despite Higher Volume

Due to normalised crude palm oil (CPO) prices anticipated in 2023, Malaysia's palm oil export revenue is projected to decline by 24% to USD 23.75B in 2023 from a record USD 31.28B reported in 2022. However, due to anticipated continued palm oil demand from importing countries, Malaysian palm oil exports are projected to rise by 3.7% to 16.3 MMT in 2023 from 15.72 MMT in 2022. Following an anticipated increase in mature planted areas, mainly in Peninsular Malaysia and Sarawak, better weather, and improved labour circumstances, CPO production is estimated to increase by 3% to 19MMT in 2023 from 18.45MMT in 2022.

Falling Demand for Crude Palm Oil Continues to Drag Down Malaysian CPO Futures

On January 11, with declining commodity demand, the crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives continued its downward trend and ended lower. According to reports, the amount of Malaysian palm oil products exported for the period of January 1–10 decreased by 44.6%, from 473,086 MT to 262,201 MT. Chinese vegetable oil futures continued to drop sharply for the second straight day as euphoria over China's economic reopening faded.

Malaysian Palm Oil Falls More Than 3% On January 10 as Exports Plunge in Early January

Due to a decline in early January exports, Malaysian palm oil futures fell more than 3% on Tuesday, January 10, to reach their lowest level in more than two weeks. The price of the benchmark FCPOc3 March delivery palm oil contract on the Bursa Malaysia Derivatives Exchange dropped by RM 146, or 3.55%, to USD 908.82/MT, marking the contract's lowest price since December 23 and the month's worst decrease.

Analysts See CPO Palm Oil Prices Ranging From USD 880.45-1042.63/MT in 2023

At the beginning of Q1 2023, it is anticipated that CPO prices will remain stable at USD 880.45-1042.63/MT due to a number of factors, including the ongoing drought in Argentina that caused significant losses to the soybean crop, the ongoing La Nina and potential El Nino, and the decreased sunflower seed production from Ukraine as a result of the ongoing conflict with Russia. From Q2 of 2023 onward, CPO prices are anticipated to decline as palm oil output recovers.

Palm Oil Reverses Initial Losses Due to Tight Supplies

On Monday, January 9, Malaysian palm oil futures reversed early losses after prices hit an 11-day low, supported by firmer crude futures and anticipations of a shortage of supply as markets awaited important data. On the Bursa Malaysia Derivatives Exchange, the benchmark palm oil contract FCPO1 for March delivery increased by 1.6%, to USD 941.46/MT, ending a three-session slump. The market had already been under pressure due to a rising ringgit, poor exports, and growing concerns about China's demand as COVID-19 infections skyrocketed.

Malaysian Oil Palm Posts Weekly Losses as Optimism Over Declining Stocks Fades

Malaysian palm oil futures dropped for a third session on Friday, January 6, as buying momentum during early trading over a likely fall in stocks dissipated. The benchmark March delivery palm oil contract on the Bursa Malaysia Derivatives Exchange dropped 0.93% to USD 920.70/MT, losing the gains it had made earlier. Estimates for MPOB's December end stocks remain above 2MMT and are at three-year highs.