Low demand holds back palm oil price growth – Mistri

From now until June, Malaysian palm oil is expected to trade at 3700-4300 ringgit per metric tonne as limited inventories offset weak demand, said leading industry analyst Dorab Mistri.

On Wednesday, the benchmark price was only trading at around 3900 ringgit per ton.

“May is going to be the toughest month for palm oil,” Mistri, director of Indian consumer goods company Godrej International, said at a price forecasting conference in Dubai.

According to him, the dynamics of palm oil prices in the coming months will depend on the production of palm oil in the leading producing countries and the weather in the key soybean producing countries in North America.

“Any weather problem in North America will cause a deadly fervor,” said Mistri.

Palm oil is affected by changes in the prices of related oils as they compete for share of the global vegetable oil market.

In March, Mistri predicted that between now and June, palm oil would cost between 3,900 and 4,500 ringgit per ton.

Demand has held back the potential for price increases, as it has been low over the past few months due to the supply of competing oils at competitive prices.

Supplies of sunflower oil from major producers in Ukraine and Russia in 2023 were higher than expected, eating into palm oil market share due to lower prices, he added.

On Wednesday, he confirmed that in 2024, palm oil production is likely to fall by one million metric tons in the world’s largest producer, Indonesia, and remain flat in Malaysia, the second largest producer.

Global demand for the oil from the food and energy sectors is expected to grow by 6 million tons in 2023/24, but supplies are projected to increase by 4.1 million tons, he said.

Tags: prices, palm oil, crop forecast, sunflower oil