Palm oil prices seen buoyed by tighter output, high demand, MPOC says

Crude palm oil prices are expected to remain supported by tighter production conditions and strong demand from top buyers India and China, state agency Malaysian Palm Oil Council (MPOC) said, according to a report by business daily The Edge Malaysia.

Malaysia’s benchmark prices are seen trading within a range of 3,800-4,200 ringgit a metric ton in the second half of 2024, MPOC chief executive Belvinder Kaur Sron told the Edge in an email interview.

The momentum of Malaysia’s palm oil production growth was expected to slow in the second half of the year due to a high base effect, after output levels in the same period in 2023 rose to the highest since 2018, she said, according to the Edge.

The combined palm oil production of Indonesia and Malaysia, the world’s top two producers of the commodity, also showed a supply deficit of 200,000 tonnes. From January to April 2024, Malaysian palm oil production increased by 440,000 tonnes, while Indonesia’s production decreased by 640,000 tonnes, the report said.

“The slowing production growth in both Malaysia and Indonesia, coupled with stable demand from India and China, will keep palm oil prices robust,” Belvinder was quoted as saying, adding that global supplies could tighten further if Indonesia increased its biodiesel blending rate to 40% next year.

Malaysia’s palm oil production was forecast to increase by 2.4% to 19 million tons in 2024, while exports were expected to rise 3.1% to 15.6 million tons, MPOC said.

The country’s palm oil inventory will remain under pressure for the rest of this year, with an estimated level of around two million tons by December, MPOC said.

Tags: MPOC, demand, benchmark prices, China, Malaysian Palm Oil Council, Indonesia, prices, Crude palm oil, Production, India, Malaysia, palm oil