1. Weekly News

Malaysia

Malaysian Palm Oil Stocks Rise in May-24 Amidst Increased CPO Stock

In May-24, Malaysian palm oil stocks experienced a 0.5% MoM increase to 1.75 million metric tons (mmt). This increase was driven by a 1.59% MoM increase in crude palm oil (CPO) stocks, totaling 979.35 thousand metric tons (mt), while processed palm oil stocks fell by 0.85% MoM to 774.19 thousand mt. CPO and palm kernel production saw significant upticks, with CPO production climbing 13.48% MoM to 1.70 mmt and palm kernel production rising 11.13% MoM to 408.32 thousand mt.

Additionally, Malaysia's palm oil exports increased by 11.66% MoM to 1.38 mmt in May-24. At the same time, oleochemical exports grew by 9.95% MoM to 256.35 thousand mt. In contrast, biodiesel exports dropped sharply by 40.85% MoM to 20.88 thousand mt. Meanwhile, palm oil and processed palm oil imports fell by 40.28% MoM to 20.76 thousand mt, but palm kernel oil imports rose by 24.02% MoM to 15.84 thousand mt.

United States

Global Vegetable Oil Prices Decline by 2.4% MoM in May-24 Due to Declining Palm Oil Prices

According to the Food and Agriculture Organization of the United Nations (FAO) Food Price Index (FFPI) global vegetable oil prices saw a 2.4% MoM decrease in May-24, despite being 7.7% higher than the same period in 2023. This decline was primarily due to falling palm oil prices, which were influenced by increased seasonal production and weak global import demand.

2. Weekly Pricing

Weekly Palm OilPricing Important Exporters (USD/kg)

Yearly Change in Palm Oil Pricing Important Exporters (W24 2023 to W24 2024)

Indonesia

In W24, palm oil prices in Indonesia decreased by 1.03% week-on-week (WoW), reaching USD 0.96 per kilogram (kg) compared to USD 0.97/kg in W23. This price decline can be attributed to weak future prices driven by competition from other vegetable oils. In addition, Indonesia’s palm oil production was negatively affected by insufficient rain, which led to decreased exports to China, Africa, and the European Union (EU).

Malaysia

The wholesale price of Malaysian palm oil remained stable at USD 0.84/kg in W24. However, palm oil futures prices have dropped significantly due to limited profit and intense competition from soybean prices. In May-24, Malaysia saw an increase in palm oil production and inventory, which led to a decrease in the quotation. With the current ample supply, prices will likely continue declining.

Thailand

In W24, palm oil prices in Thailand remained unchanged at USD 0.88/kg. However, based on a monthly and yearly comparison, the prices increased by 2.33% MoM and 8.64% year-on-year (YoY). Thailand’s palm oil industry faces stiff competition from Indonesia and Malaysia, leading Thailand to focus on high-value products. Additionally, the EU's environmental and deforestation regulations have compelled the country to upgrade its industry towards pursuing sustainable development.

3.Actionable Recommendations

Strengthen Trade Relations and Agreements

Negotiating favorable trade agreements and resolving trade barriers can enhance market access and stability. Collaborative efforts with governments and industry associations can help negotiate better terms and reduce tariffs or non-tariff barriers in key markets. Engaging in bilateral and multilateral trade discussions can also open up new opportunities.

Focus on Value-Added Products

Moving up the value chain by producing refined, bleached, and deodorized palm oil and other high-value derivatives can increase profitability and market stability. Developing bio-based products such as biodiesel and oleochemicals can diversify revenue streams and reduce vulnerability to price fluctuations in CPO.

Optimize Production Efficiency

Palm oil producers should invest in advanced agricultural technologies and practices to address fluctuating production levels. Precision agriculture, improved irrigation systems, and better pest management techniques can help stabilize production. Research and development into higher-yielding and disease-resistant palm oil varieties can also enhance productivity and resilience against adverse weather conditions.

Source: Grain Trade,UkrAgroConsult,Agropopular, Astroawani