Market volatility continues as crude palm oil futures weaken while export momentum builds across Southeast Asia
Crude palm oil (CPO) prices on Bursa Malaysia Derivatives (BMD) retreated this week, sliding to MYR 3,833 per metric ton from MYR 3,882/mt recorded in the previous week. Despite the price decline, emerging market dynamics suggest a more complex picture for palm oil fundamentals heading into the second half of May.
Malaysian stock levels may provide price support
Early indicators suggest Malaysian palm oil inventory levels for May might not expand as dramatically as market participants initially anticipated. This development could offer underlying support to palm oil prices despite the recent weakness in futures markets.
The subdued stock growth expectations align with mixed production data emerging from key industry bodies. Malaysian palm oil production showed minimal expansion during the first 25 days of May, with SPPOMA reporting production growth of just 0.73% compared to the same period in April.
Production data reveals divergent growth patterns
Production figures from various industry sources paint a picture of modest growth across Malaysia’s palm oil sector. The Malaysian Palm Oil Association (MPOA) reported a 3.51% increase in production for the May 1-20 period, while UOB KayHian’s estimates suggest growth could range between -1% and +3% for the month.
These relatively contained production increases contrast with the more robust export performance observed across the region’s two largest palm oil producing nations.
Export momentum accelerates across key origins
Southeast Asian palm oil exports demonstrated strong momentum during May, with both Malaysia and Indonesia recording significant shipment increases. Malaysian palm oil exports surged 11.63% during May 1-25 compared to the equivalent April period, according to surveyor data reported to industry sources.
Indonesia’s export performance proved even more impressive, with shipments during May 1-20 climbing 33% compared to the same April timeframe. This robust export activity suggests healthy global demand conditions despite recent price volatility in futures markets.
Market outlook remains complex
The combination of declining futures prices, controlled production growth, and accelerating export demand creates a nuanced market environment for palm oil stakeholders. While near-term price pressures persist, the fundamental supply-demand dynamics suggest potential support factors may emerge as the month progresses.
Industry participants continue monitoring Malaysian stock level developments closely, as inventory changes remain a critical factor influencing regional palm oil price direction.
