The crude palm oil prices have seen an overall increase since the previous week, driven by a combination of factors. These factors include: (1) Weakening of the Malaysian Ringgit due to slower economic growth in Malaysia, (2) elevated CBOT soybean oil prices, attributed to reports of hot and dry weather in the US Midwest, and (3) robust Malaysian palm oil exports from August 1st to 20th as compared to the same period in July: Amspec reported an increase from 687,098 mt to 806,655 mt (+119,557 mt or +17.40%), and ITS reported an increase from 754,214 mt to 827,975 mt (+73,761 mt or +9.78%).

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Fig 1. Price Comparison between Malaysian crude palm oil and palm kernel oil

  • Malaysian crude palm oil spot settlement price on the BMD (24/08/2023) increased to €773 | $844 / mt from €734 | $802 / mt same period last week
  • The Vesper West EU Forward Price Index for crude palm oil (24/08/2023) firmed to €910 | $990 / mt (CIF Rotterdam, November contract) from €869 | $950 / mt same period last week
  • The Malaysian spot crude palm kernel oil price (22/08/2023) slid to €788 | $858 / mt from €798 | $872 / mt same period last week
  • The Vesper West EU Forward Price Index for crude palm kernel oil (21/08/2023) increased to €924 | $1005 / mt (CIF Rotterdam, October-November contract) from €882 | $965 / mt same period last week

According to a trader based in Malaysia who spoke to Vesper, the market appears to be moving in a bullish direction. “We see many players taking positions on long, which is moving prices higher. The demand seems to improve in destinations such as the Middle East and South Asia”.

However, looking at the longer term, the current and short-term bullish market signals are expected to transition to a bearish market sentiment. This shift is anticipated due to bearish global supply and demand dynamics for oils and seeds, along with the broader global economic slowdown. Interviews with market participants by Vesper suggest that palm oil output from Malaysia and Indonesia is projected to increase in August. Nevertheless, this growth is likely to be balanced out by higher exports, as Indian buying is expected to be higher for Sep, Oct & Nov for Deepavali season, followed by China buying until January.

Read more Highlights on the entire vegetable oil complex on Vesper.