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CPO Prices Poised to Strengthen from June Onwards, Trading Between RM 3,900 to RM 4,150

Petaling Jaya, 14 June 2024 – In May, Malaysian palm oil stocks experienced a marginal increase of 0.5% to 1.75 million tonnes, despite a strong 13% rise in production. This limited inventory growth was due to demand outstripping supply. Malaysia’s palm oil production rose by 203,000 tonnes in May, while combined exports and domestic consumption increased by 212,000 tonnes.

Palm oil prices are poised to see further upward movement in June as production growth in Malaysia is expected to slow down in the second half of 2024, while exports are on the rise. From January to May 2024, Malaysia has demonstrated impressive palm oil production and export performance, with production increasing by 9% (626,000 tonnes) and exports rising by 7% (393,000 tonnes).

In contrast, Indonesia witnessed a decline in crude palm oil production by 647,000 tonnes (5.0%) from January to March 2024, according to GAPKI data. Consequently, the combined palm oil production in Malaysia and Indonesia is estimated to have decreased by half a million tonnes in the first quarter of 2024. Despite Malaysia’s positive production growth, the combined palm oil inventory growth for both countries is anticipated to be marginal.

Prices of rapeseed, sunflower, and soybean oil in the European market rose by 6%, 8%, and 7%, respectively in May, while palm oil declined by 4%. As a result, the price premium of soft oils over palm oil increased from USD 40 to USD 115, which is expected to support the ongoing recovery of Malaysian palm oil exports.

The USDA initial prospective oilseed production estimate for the 2024/25 marketing year forecasts a 4% increase in global oilseed production. Consequently, global oilseed stocks are forecasted to rise by 6%, reaching their highest level in a decade in 2024/25. Therefore, the oilseed supply is expected to remain ample.

Palm oil prices are projected to find support at RM 3,900 in June, as the combined supply from Malaysia and Indonesia is expected to tighten in the latter part of 2024, along with an upsurge in palm oil exports. However, price increases are likely to be capped at RM 4,150 due to the USDA’s projected production surplus of oilseeds for 2024/25.

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