1.Weekly News

India

India's Palm Oil Imports From Malaysia Reached 285.84 Thousand mt in Apr-24

India imported 285.84 thousand metric tons (mt) of palm oil from Malaysia in Apr-24, constituting 21.6% of its total vegetable oil imports for that month. These imports from Malaysia comprised 50.18 thousand mt of refined, bleached, and deodorized (RBD) palm oil and 227.65 thousand mt of crude palm oil (CPO). According to the Solvent Extractors' Association of India (SEA), India's edible oil imports in Apr-24 reached 1.3 million metric tons (mmt), marking a 13.5% month-on-month (MoM) increase compared to May-24. The share of palm oil in Mar-24's imports accounted for 52%

Malaysia

Palm Oil Futures Surged by 2.25% on May 17, 2024

On May 17, 2024, the FCPOc3 benchmark palm oil contract for delivery in Aug-24 surged by 2.26% to USD 830.31/mt on the Bursa Malaysia Derivatives Exchange. Additionally, the contract witnessed a weekly increase of 2.13%. This uptrend in futures was propelled by bullish momentum in the Chicago soybean oil futures and South American market prices. Palm oil prices are influenced by movements in related oils as they vie for a position in the global vegetable oils market.

Additionally, Malaysia maintained its export tax for crude palm oil at 8% for Jun-24 while reducing its reference price to USD 845.13/mt for the same month. According to Intertek Testing Services, exports of Malaysian palm oil products from May 1 to May 15 declined by 5.2% MoM to 600.8 thousand mt compared to 633.68 thousand mt in Apr-24. However, cargo surveyor Societe Generale de Surveillance (SGS) estimates that exports amounted to 426.95 thousand mt.

Thailand

Increased Production Area and Decreased Production in Thailand

The Secretary-General of the Office of Agricultural Economics in Thailand has projected a 2.13% year-on-year (YoY) increase in Thailand's oil palm production area, bringing up the total to 1.01 million hectares (ha) in 2024. However, adverse weather conditions, such as hot and dry weather patterns and the anticipated El Niño phenomenon, are expected to lead to a 0.80% decline in production to 18.12 mmt. Furthermore, the average yield is anticipated to decrease by 2.87% YoY. The National Oil Palm Policy Committee actively monitors production, marketing, and prices to address this situation. Additionally, measures have been implemented to prevent market saturation and ensure fair purchasing practices for farmers.

2.Weekly Pricing

Weekly Palm Oil Pricing Important Exporters (USD/kg)

Yearly Change in Palm Oil Pricing Important Exporters (W20 2023 to W20 2024)

Indonesia

In W20, palm oil prices in Indonesia dropped significantly by 6.32% week-on-week (WoW), reaching USD 0.89 per kilogram (kg). This decline is due to concerns about increased output and decreased demand within the country. Despite the Mar-23 export data from Malaysia and Indonesia showing a surge in demand and reduced inventories, traders remained pessimistic. This was because many buyers in India and China are shifting their preferences towards sunflower oil and soybean oil, according to S&P Global Commodity Insights.

Malaysia

In W20, palm oil prices in Malaysia remained stable at USD 0.83/kg. However, on May 17, 2024, palm oil futures increased by 2.26%, reaching USD 830.31/mt on the Bursa Malaysia Derivatives Exchange. The price increase is driven by favorable movements observed in Chicago soybean oil futures and South American market prices.

Thailand

In W20, Thailand saw a 1.16% WoW decrease in palm oil prices, with prices falling to USD 0.85/kg. This marked the fifth consecutive weekly decline. Despite a projected 0.8% YoY decline in palm oil production in 2024, weak demand and decreasing prices in Indonesia and Malaysia continued to depress prices in Thailand.

3. Actionable Recommendations

Monitoring Climate Patterns

With adverse weather conditions affecting major producers like Thailand, stakeholders should closely monitor climate patterns to anticipate potential supply disruptions. Investing in technologies for weather forecasting and risk assessment can enable proactive measures to mitigate the impact of climate change on palm oil production.

Enhancing Productivity and Yield

Thailand's projected decline in production highlights the importance of enhancing productivity and yield. Collaborative efforts between government agencies, research institutions, and farmers can facilitate the adoption of sustainable farming practices, improved crop management techniques, and resilient crop varieties to mitigate production losses and ensure long-term sustainability.

Strategic Pricing and Risk Management

In response to price fluctuations in key exporting countries, stakeholders should implement strategic pricing and risk management strategies. This includes hedging against price risks through futures contracts, optimizing inventory management to balance supply and demand dynamics, and collaborating with financial institutions to access risk mitigation tools and financing options.