1. Weekly News

Malaysia

Malaysia Enforces Palm Oil Regulations to Protect Forests and Biodiversity

Malaysia has implemented strict regulations to safeguard its forests and enhance biodiversity protection by banning the establishment of new oil palm plantations in forest areas. It aims to maintain a forest cover of 54% and will prohibit processing palm fruits harvested from deforested areas. To further ensure sustainability, the government will mandate the Malaysian Sustainable Palm Oil (MSPO) certification for all producers, providing buyers with confidence in the products' sustainability and quality. Although the palm oil sector significantly contributes to Malaysia's economy, accounting for 3% of the gross domestic product (GDP) and providing approximately one million jobs, the industry faces criticism and negative propaganda from some Western countries concerning its environmental impact.

Malaysia’s Palm Oil Stocks Decreased in Jul-24

According to the Malaysian Palm Oil Board (MPOB), Malaysia's palm oil stocks decreased by 5.35% month-on-month (MoM) to 1.73 million metric tons (mmt) in Jul-24. In addition, the country's crude palm oil production increased by 13.97% MoM to 1.84 mmt in Jul-24. Additionally, palm oil exports saw a significant surge of 39.92% MoM to 1.69 mmt in the same month. On the other hand, imports dropped by 10.69% MoM to 10.48 thousand metric tons (mt).

India

India Boosts Domestic Palm Oil Production

India is taking significant steps to reduce its dependence on palm oil imports and promote self-reliance through the National Mission on Edible Oils-Oil Palm (NMEO-OP). This initiative aims to expand oil palm cultivation and increase domestic production by offering farmers financial support and providing a buyback guarantee to protect them from price volatility. India has more than 3 lakh hectares (ha) of land under oil palm, with an additional potential of around 28 lakh ha. The NMEO-OP is a critical step towards reducing import dependence and benefiting farmers through increased income and employment opportunities.

Indonesia

West Sulawesi's PSR Exceeds Productivity Goals

Indonesia's West Sulawesi Provincial Plantation Service has implemented the People's Oil Palm Rejuvenation Program (PSR) to improve the welfare of oil palm farmers by increasing the production and productivity of their plantations. A vital component of the initiative involves the socialization of a physical assessment of oil palm plantations, focusing on growth, plant health, and productivity. The program aims to achieve a minimum standard of 3.5 kilograms (kg) per bunch. The assessment results have been promising, with averages exceeding the minimum standard and reaching 8 kg per bunch, demonstrating that the PSR program surpasses its productivity expectations.

Philippine

PPDCI Targets BARMM for Expansion

The Philippine Palm Oil Development Council (PPDCI) has identified the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) as a critical area for expanding oil palm plantations, with approximately 800 thousand ha of suitable land. To reduce the country's heavy reliance on palm oil imports from neighboring countries, the PPDCI plans to plant palm oil trees on 5 thousand ha in 2024 and enhance existing oil palm farms. The Philippine government supports the development of the palm oil industry, viewing it as a strategic initiative to combat poverty and insurgency in the region while boosting local production.

Peru

Peru's RPO Exports in the First Seven Months of 2024

According to the consulting firm Agrodata, Peru exported 38.69 thousand mt of Refined Palm Oil (RPO) with a free on board (FOB) value of USD 38.5 million in the first seven months of 2024. Chile was the leading destination of these shipments, with an export value of USD 11.49 million, followed by Brazil (USD 7.58 million), Colombia (USD 7.02 million), and Guatemala (USD 6.58 million)

2. Weekly Pricing

Weekly Palm Oil Pricing Important Exporters (USD/kg)

Yearly Change in Palm Oil Pricing Important Exporters (W33 2023 to W33 2024)

Indonesia

In W33, Indonesia's palm oil prices remained unchanged week-on-week (WoW) at USD 0.96/kg, marking a 3.23% MoM and 5.49% year-on-year (YoY) rise. Palm oil futures prices recovered this week after a three-week loss due to concerns about Indonesia's slow production growth. However, concerns remain about demand due to the higher cost of palm oil compared to sunflower oil. Global olive oil prices are anticipated to fluctuate and remain resilient as Indonesia's production growth in Aug-24 is lower than expected.

Malaysia

In W33, Malaysia's palm oil prices increased by 1.15% WoW to USD 0.88/kg, compared to USD 0.87/kg in W32, with the MoM and YoY prices increasing by 3.23% and 5.49%, respectively. This price rise is due to concerns about Indonesia's production and Malaysia's falling inventory. However, according to independent inspection company AmSpec Agri Malaysia, the country's palm oil exports declined 22.3% MoM in the first half of Aug-24, putting downward pressure on the prices. In addition, the demand from India and China will continue to influence local prices.

Thailand

In W33, Thailand's palm oil prices rose 1.01% WoW to USD 0.92/kg, rising from USD 0.91/kg in W32. This rise mirrors the broader global trend, driven by currency fluctuations and increased future prices. Thailand's Minister of Agriculture and Cooperatives has announced the government's strategic vision to establish the country as the World's Agriculture and Food Center. The goal is to triple farmers' income within the next four years by developing agricultural immunity and sustainability through advanced technology, precision farming, and ensuring career stability for farmers. Additionally, the plan aims to improve the quality of farm products to boost income by regulating the overproduction of goods in high demand domestically, promoting the production of under-produced items, and encouraging the development of high-quality breeds and technology for potential products.

3.Actionable Recommendations

Optimize Inventory and Export Management

With rising palm oil prices and decreasing stocks, Malaysian producers should optimize inventory management to maintain price stability. Traders must stay informed and prepared by monitoring export trends, particularly to key markets like India and China, which will be essential to navigating the upcoming months. Diversifying export destinations and exploring new markets can also mitigate the impact of fluctuating demand from traditional buyers.

Leverage Strategic Agricultural Vision

Thailand’s palm oil producers should align with the government’s strategic vision by adopting advanced farming technologies and improving product quality. Prioritizing precision farming techniques can help manage supply levels and reduce the risk of overproduction. Furthermore, engaging in government programs that support agricultural innovation and sustainability can contribute to long-term profitability and position Thailand as a leading global agricultural hub.

Strengthen Sustainable Palm Oil Practices

Producers should pursue the MSPO certification to align with Malaysia's new palm oil regulations to ensure compliance and maintain market access. Additionally, companies should focus on enhancing traceability systems to verify the origin of palm fruits and avoid processing those harvested from deforested areas. Advocacy and educational campaigns to counter negative propaganda can help protect the industry's global reputation while promoting its economic and environmental benefits.

Sources: Tridge, Hellenic Shipping News, Theedgemarkets, Theprint, UkrAgroConsult, Wartaekonomi, Agraria, Naewna