In W40 in the palm oil landscape, palm oil futures on the Bursa Malaysia Derivatives Exchange experienced fluctuations. On Monday, October 2, the Dec-23 palm oil contract fell 1.73% to USD 785.15 per metric ton (mt), extending losses for a second session after soybean oil prices fell in Chicago as China closed for an extended holiday. Demand fell from major buyers India and China. The Mid-Autumn Festival and National Day weekend in China run from September 29 to October 6. Additionally, palm oil futures faced a monthly decline of 6.06% in September, following two consecutive months of gains.
On Tuesday, October 3, there was a slight rebound, with palm oil futures rising by 0.84% to USD 790.39/mt, driven by a surge in soybean oil prices in Chicago. However, despite recent increases, it is anticipated that weak demand will prevent significant price rises. The volatility continued, with palm oil futures falling 1.4% to USD 775.85/mt on October 4 and 0.42% to USD 761.71/mt on October 6. These declines were primarily attributed to reduced overseas demand from top buyers such as India and China.
In Sept-23, Malaysian palm inventories were at an 11-month high, 12% year-on-year (YoY), while production is up by 6.1% YoY. Moreover, Malaysian palm oil prices are expected to range from USD 790 to 960/mt until mid-2024 due to concerns about El Niño affecting supplies combined with increasing demand. Indonesia raised its benchmark price for crude palm oil for the first half of Oct-23 to USD 827.37/mt, while export duty and levies remained unchanged at USD 33 and USD 85/mt. The Indonesian Palm Oil Association forecasts a 5% YoY increase in palm oil production, with year-end stocks expected to reach 3.2 million metric tons (mmt).
Lastly, in Sept-23, India's edible oil imports dropped by 19% MoM to 1.5 mmt, with palm oil imports decreasing to 800 thousand mt. This decline was driven by India's stockpiles rising to a record level as a result of increased purchases in July and August. Edible oil stockpiles reached 3.7 mmt as of September 1, compared to 2.4 mmt in Sept-22.