In W43 in the palm oil landscape, palm oil futures on the Bursa Malaysia Derivatives Exchange experienced fluctuations. On Monday, October 23, the Jan-24 palm oil contract declined by more than 1%, closing at USD 783.83 per metric ton (mt). This decrease was linked to weaker performance in rival vegetable oils and crude oil and strong growth in Malaysian palm oil exports, which increased by 7.9 to 9.9% month-on-month (MoM) during the October 1 to October 20 period. On Tuesday, October 24, Malaysian palm oil futures fell by 2.1% to USD 771.65/mt due to a robust United States (US) soybean crop and a strengthening Malaysian ringgit (MYR), although strong demand helped limit the losses. However, on Wednesday, October 25, palm oil futures rebounded by 0.4% to USD 773.12/mt, and by October 26, they reached USD 789.29/mt. This rebound was attributed to estimates of a 1.1% to 3.1% MoM decrease in exports of Malaysian palm oil products between October 1 and October 25.
The Malaysian government, as per the Ministry of Finance (MoF), currently has no plans to eliminate the windfall profit levy (WPL) imposed on the palm oil industry. The threshold values for this levy have been revised, with the latest thresholds being USD 629.92 for Peninsular Malaysia and USD 734.91 for Sabah and Sarawak, which is an increase from the original threshold of USD 419.95. Furthermore, the government has allocated USD 21 million to incentivize the replanting of old oil palm trees that are over 25 years old. Additionally, the Malaysian Palm Oil Board (MPOB) has established Sustainable Palm Growers' Cooperatives (KPSM) across the country to encourage smallholder participation in cooperatives.
Indonesia's palm oil exports in Aug-23, which include refined products, totaled 2.07 million metric tons (mmt), marking a 55% year-on-year (YoY) decrease. Crude palm oil production also decreased from 4.36 mmt in Jul-23 to 3.86 mmt in Aug-23. However, domestic palm oil stocks increased slightly to 3.24 mmt in Aug-23.
Moreover, Indonesian palm oil farmers are facing challenges due to a regulatory conflict between the central government and regional governments regarding the legality of oil palm land. Farmers with long-standing legal permits are now facing conflicts with new regulations that question the legality of their land. The government aims to clear 3.3 million hectares (ha) of oil palm plantations in forest areas to improve palm oil industry governance. Owners of oil palm plantations in forest areas will be required to pay taxes and adhere to relevant regulations.