The palm oil market saw a sharp price increase in Week 7, driven by lower-than-expected Malaysian production and stock levels. Meanwhile, Indonesian exports also saw a significant decline, further tightening supply conditions.
Palm Oil Prices Jump Amidst Supply Concerns
- The Spot BMD price for crude palm oil (CPO) surged to $1,079/MT, up from $1,029/MT last week.
- The latest MPOB report revealed a 17% drop in Malaysian palm oil production, with total output falling to 1.237 MMT.
- Exports declined by 13% to 1.168 MMT, and stocks fell 7.5% to 1.580 MMT.
- Market expectations were for a production decline of no more than 11% and a stock reduction of no more than 4%, making the latest figures more bearish than anticipated.
Indonesia’s Palm Oil Exports Take a Hit
- A report from a Vesper partner indicated that Indonesian exports dropped 21% in January, totaling 1,342,228 MT.
- Market watchers now speculate on Ramadan-driven demand, which could influence export figures for February.
What This Means for the Market
The unexpected drop in Malaysian production and stocks, combined with the decline in Indonesian exports, has strengthened palm oil prices. With Ramadan demand on the horizon and ongoing supply tightness, traders will closely monitor export trends and biodiesel policies for further price movements.
For an in-depth analysis and market forecast, read our full report here: https://app.vespertool.com/market-analysis/1704?commodity=vegetable-oil
