In W18 in the palm oil landscape, Malaysia's palm oil exports fell 14% in the first 25 days of April compared to the same period in 2022 as sales to India plummeted 32% and to China fell about 20%. On May 2, the price of crude palm oil (CPO) for May 2023 on Bursa Malaysia Derivatives (BMD) increased by USD 17.74 to USD 901.76/MT as the market adjusted prices following the long weekend holiday. Malaysian palm oil futures for July 2023, however, recovered early losses on Wednesday, May 3, to end higher by 0.26% at USD 770.79/MT, despite weak demand and slow export shipments weighing on prices. Earlier, the contract had decreased by 2.3%. As domestic consumption increases despite stagnant production, Malaysia's palm oil inventories at the end of April are expected to reach their lowest level in 11 months. Stockpiles reportedly decreased by 9.8% to 1.51MMT from March, down for a third month to hit its lowest since May 2022.
India's palm oil imports plunged 30% MoM to 508K MT in April, a 14-month low, as price-sensitive consumers switched to sunflower oil and soy oil due to palm oil's higher price compared to competing soft oils. The surprise drop in Indian imports could increase Malaysian stocks and put further downward pressure on palm oil prices which are already trading near a seven-month low. It will also likely make it difficult for Indonesia to increase exports after easing restrictions imposed on the shipments earlier this year. According to the Meteorology, Climatology, and Geophysics Agency (BMKG), the El Nino phenomenon, or protracted dry season, is expected to occur in Indonesia in 2023. However, palm oil trees can theoretically tolerate the expected increase in temperature (34-36°C), but the BMKG urges famers to take agronomic actions to counteract the dry and hot conditions. Finally, by 2027, the South Korean government is expected to import 6MMT of wheat, soybeans, maize, oil palm (edible oil), and cassava to stabilize the supply, three times higher than the 2.08MMT secured in 2021.
