In W23 in the palm oil landscape in Malaysia, on Wednesday, June 7, August futures on the Malaysian Exchange dropped for the third consecutive month, by almost 6% to USD 694/MT. Weak data from China, where industrial sector activity has been decreasing for the past two months, put pressure on pricing. Malaysia is expected to produce 19 million mt of palm oil in 2023, up from 18.45 million mt in 2022. Additionally, due to favourable weather conditions and longer harvesting days, palm oil inventories at the end of May are expected to rise by 6.8% MoM to 1.6 million mt, the highest level since December, while exports remain flat. According to the Malaysian Palm Oil Board (MPOB), Malaysia's crude palm oil production could fall by 1-3MMT in 2024, with most of the impact expected to occur in the larger producing states of Sabah and Sarawak due to El Nino weather. El Nino is unlikely to have an impact on productivity in 2023 because it takes 15 to 18 months to develop. In addition, due to weather fluctuations, the price of Malaysian benchmark crude palm oil is forecast to rise from USD 823.58/mt to USD 866.93/mt in 2024, while the average price forecast of USD 910.27/mt in 2023 is maintained. Nigeria's palm oil imports from Malaysia surged 353% in Q1 of 2023 to 92,961 mt from 20,513 mt in the same period in 2022 as the country has a shortfall compared to demand. Nigerian palm oil production reached 1.4 million mt in 2022, compared to domestic demand, which averages 2.4 million mt annually.
There are currently 2,511 oil palm plantation companies in Indonesia spread across 26 provinces with a production capacity of 84.8 million mt and a utilisation rate of around 55%, producing 47 million mt of CPO. Indonesia produces the most palm oil in the world, with a market share of up to 55%. In India, palm oil imports dropped to a 27-month low in May, to 441 thousand mt from 510,094 mt in April, as buyers cancelled expensive cargoes of edible oil and replaced them with cheaper soy oil and sunflower oil. Meanwhile, sunflower oil imports in May jumped 28% MoM to 319 thousand mt, while soybean oil imports rose 10% to 290 thousand mt. Additionally, the Indian government lowered the base import price for crude palm oil from USD 988/mt to USD 898/mt, for refined palm oil from USD 1,020/mt to USD 984/mt, and for crude soybean oil from USD 983/mt to USD 976/mt. India purchases palm oil mainly from Indonesia and Malaysia, the top two producers, while it imports soybean oil and sunflower oil from Argentina, Brazil, Russia, and Ukraine.
