PETALING JAYA (Jan 11): The Malaysian Palm Oil Council (MPOC) is forecasting average crude palm oil (CPO) prices in 2024 to be at RM4,000 per tonne, driven by Indonesia's higher domestic consumption of biodiesel and food.

In a statement on Thursday, the council said it is expecting a shortfall of 240,000 tonnes, as Indonesia's domestic demand is expected to grow to 640,000 tonnes, while production is expected to stay flat.

"The deficit could further expand if exports exceed the forecast levels," it said.

Despite an overall positive outlook for palm oil prices in 2024, the MPOC expects lower prices in January, ranging between RM3,600 and RM3,850. This is primarily attributed to tepid demand from key importing countries and price competition from sunflower and rapeseed oil.

The MPOC noted that there was merely a US$3 (RM13.93) price premium of sunflower oil over palm oil in the European market, and a US$39 premium for rapeseed oil in December 2023, linked to a surge in global crushing of sunflower seeds and rapeseed.

Additionally, the MPOC added that January and February are typically low-export months in Malaysia, with exports totalling 1.13 million tonnes in January 2023 and 1.12 million tonnes in February 2023.

Concerning palm oil stocks, the MPOC projects a 1% growth in Malaysian palm oil production in 2024, reaching approximately 18.75 million tonnes.

It said Malaysia experienced a 4.64% decline to 2.29 million tonnes in December 2023, marking the lowest level in three months, aligning with the overall trend of palm oil production.

Nevertheless, the MPOC reported a surge in Malaysia's palm oil production in the fourth quarter of 2023 to 5.27 million tonnes, the highest level since 2018, driven by the onset of El Niño.

The council expects this production trend to continue into the first quarter of 2024.