Potential for Improved CPO Prices: RM 3,900 to RM 4,150 per Ton in June

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Potential for Improved CPO Prices: RM 3,900 to RM 4,150 per Ton in June. Photo by: Palmoilmagazine.com

PALMOILMAGAZINE, PETALING JAYA – In May 2024, Malaysia’s palm oil stock rose by 0.5% to 1.75 million tons, fueled by a 13% increase in production. Despite limited supply growth, demand outpaced supply, driving production up by 203,000 tons while combined exports and domestic consumption increased by 212,000 tons.

According to the Malaysian Palm Oil Council (MPOC) on June 16, 2024, palm oil prices may rise in June. Malaysia’s production growth is expected to slow in the second half of 2024, with exports continuing to increase. From January to May 2024, Malaysia saw production and exports rise impressively by 9% (626,000 tons) and 7% (393,000 tons) respectively.

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In contrast, Indonesia reported a 5.0% decrease in crude palm oil (CPO) production totaling 647,000 tons from January to March 2024, as stated by the Indonesian Palm Oil Association (IPOA).

Also Read: CPO Prices on KPBN Inacom Fell on Wednesday (19/6), While at Malaysia Exchange Increased

This indicates a potential combined production decrease of half a million tons in the first quarter of 2024 between Malaysia and Indonesia. Despite Malaysia’s positive production trend, overall stock levels in both countries are not expected to rise significantly.

In Europe, canola oil, sunflower oil, and soyoil production each increased by 6%, 8%, and 7% respectively in May, while CPO prices decreased by 4%. Consequently, the premium for soft oils could increase from USD 40 to USD 115, which is anticipated to support the recovery of palm oil exports from Malaysia.

The prediction of soyoil production by United States Department of Agriculture in 2024/25 could be increasing up to 4%. As the result, the stocks of soyoil in the globe could be increasing 6%, or hitting the highest level in the past decade in 2024/25. That is why vegetable oil supply would remain enough.

Palm oil could get the support up to RM 3.900 in June because the combination of supply from Malaysia and Indonesia could be closer by the late of 2024, as same as the increasing palm oil exports. But the increasing price could be restricted at RM 4.150 because USDA predicted, vegetable oil production would be surplus in 2024/25.

By the progress, palm oil industries in Malaysia and Indonesia would significantly face the challenges and opportunities. The increasing exports and competitive price would be the keys to face the market dynamic in the globe that keeps changing. (T2)

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