Weekly Product Updates

W48 Palm Oil Update: Indonesia's Aggressive Offers Lead to Midweek Decline in Palm Oil Futures, and EU Imports from Indonesia See 20% Dip

RBD Palm Oil
Market & Price Trends
Published Dec 8, 2023

Palm Oil Futures Exhibit Volatility in W48

Palm oil futures on the Bursa Malaysia Derivatives Exchange fluctuated during W48. On Monday, the Jan-24 palm oil contract declined 0.05% to USD 834.78 per metric ton (mt), its lowest closing level in nearly two weeks, primarily due to weaker crude prices. On Tuesday, palm oil futures rose 0.13% to USD 836.50/mt, supported by strength in rival edible oils, despite poor demand and expectations of declining production. Conversely, on Wednesday, palm oil futures dropped 0.80% to USD 830.06/mt, influenced by aggressive offers from Indonesia, the largest palm oil producer. The Malaysian ringgit's (MYR) 0.44% rise against the United States dollar (USD) also contributed to the decline. On Thursday, palm oil futures were up 0.59% to USD 833.51/mt, fueled by improved import margins and parities in key markets such as China and India, coupled with stronger domestic consumption. Additionally, Nov-23's exports of Malaysian palm oil products were estimated to be up between 2% and 11% month-on-month (MoM).

Sarawak, Malaysia, Experiences 6% YoY Surge in Palm Oil Production from Jan-23 to Oct-23

From Jan-23 to Oct-23, in Sarawak, Malaysia, palm oil production has shown positive growth, with a 4.1% year-on-year (YoY) increase in fresh bunches totaling 17.66 million metric tons (mmt). The production of crude palm oil (CPO) and crude palm kernel oil (CPKO) also increased by 6% YoY to 3.47 mmt and 5.5% YoY to 321,398 mt, respectively. Meanwhile, the average fresh fruit bunches from Jan-23 to Oct-23 increased by 4.5% YoY to 12.13 mt per hectare (ha). This is attributed to the increased workforce post-COVID-19, along with the rapid adoption of mechanization and cultivation in mature palm tree areas.

Indonesia's Palm Oil Exports to EU Decline, While Malaysia's Increase

Indonesia decreased its palm oil sales to the European Union (EU) between July 1 and November 26 by almost 20% YoY, from 558.5 thousand mt to 463.3 thousand mt, maintaining its position as the largest exporter of palm oil to Europe. Conversely, Malaysia increased its shipments to the EU by 8% Yoy, from nearly 301 thousand mt to 324.8 thousand mt during that period. Guatemala, the third-largest exporter to the EU, saw a decline in shipments from 277.4 thousand mt to 214.8 thousand mt.

Myanmar's Palm Oil Import Volume Surge 28% YoY in 2023/24

In the first half of Myanmar's 2023/24 fiscal year (April–September), palm oil import volume increased 28% YoY to 294,457 mt, but the value dropped 11% YoY to USD 294.58 million. Myanmar mainly imports palm oil from Malaysia and Indonesia to meet its domestic edible oil demand. The Ministry of Commerce and the Edible Oil Import, Storage, and Sales Supervision Committee monitor international palm oil prices and regulate domestic prices. The daily wholesale guidance price, determined by the Free on Board (FOB) price of Malaysian palm oil plus additional costs, is set at USD 2.38 per kilogram (kg). However, reports indicate a market price of USD 2.86/kg.

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