In W27 in the palm oil landscape, on Monday, July 3, Malaysian palm oil futures rose by 5.1%, reaching a three-month high of USD 854/metric ton (mt). On July 5, the palm oil contract for September delivery rose by 0.44% to USD 840.52/mt, driven by concerns about high inventories in June amid the backdrop of the pandemic. Similarly on Thursday, July 6, the benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange closed up 1.27% to USD 839.27/mt due to forecasts of lower June production and expectations of improved exports. On Friday, July 7, palm oil futures dropped by 2% to USD 821.47/mt as traders awaited key palm oil board data, although the market was still on track for a second consecutive weekly gain. The average selling price forecast for crude palm oil in 2023 remains at USD 731.03/mt, pending weather developments from July to August.
In June, Malaysia saw a nearly 11% MoM increase in palm oil reserves, reaching 1.87 million mt, the highest level in four months. This rise is mainly attributed to high production and limited export growth in the second-largest palm oil-producing country. Crude palm oil production experienced a slight decline of approximately 1% MoM in June, reaching 1.50 million mt following a significant 27% increase in May. Meanwhile, palm oil exports remained unchanged at 1.08 million mt. Notably, India's palm oil imports increased significantly by 49% MoM in June, totaling 655 thousand mt, suggesting a potential market recovery. This would positively impact Malaysian palm oil futures and help reduce inventories in both Indonesia and Malaysia. This is mainly driven by a decline in palm oil prices, which reached their lowest point in 28 months. India primarily sources palm oil from Indonesia, Malaysia, and Thailand.
Lastly, Indonesia has extended its offer to help Kenya enhance the production of palm and sunflower oil. The discussions will focus on providing support to farmers in specific counties, including Lamu, Kwale, Tana River, Taita Taveta, Homa Bay, Migori, Kisumu, and Busia. This support will be provided through an out-grower scheme, benefiting individual farmers, as well as through large-scale farming initiatives.
