KUALA LUMPUR (May 20): Crude palm oil prices (CPO) are expected to range between RM3,700 to RM3,950 this month as seasonal recovery production push prices down, according to the Malaysian Palm Oil Council (MPOC).

However, despite the rise in production, MPOC forecasts palm oil stockpiles would remain below two million tonnes in the second quarter of this year. This could be offset by continued export demand, especially from India and China, where edible oil inventories are dwindling.

“The anticipated supply uptick has already impacted prices, with the recent drop in palm oil prices, declining 9% in April, reversing gains from March,” MPOC said in a statement.

“In the European Market, palm oil prices dropped 5.5% in April, while soybean oil decreased by 2.5%. Sunflower and rapeseed oil prices, however, increased by 3.7% and 8.7% respectively. This shift is expected to prompt key importing countries to favor palm oil over soft oils,” it added.

According to Bloomberg data, the third-month CPO contract peaked at RM4,336 per tonne on April 3, up more than 18% from RM3,650 per tonne at the end of December.

At the time of writing on Monday, the CPO third month contract was trading at RM3,898 per tonne.

Meanwhile, production of soybean, rapeseed and sunflower seeds is expected to surge by 26 million tonnes, while processing capacity (crushing) is projected to increase by 16 million tonnes, said MPOC.

“Despite the prevailing bearish sentiment in the soft oils market, rapeseed and sunflower oil have achieved a price premium over palm oil. Therefore, demand is expected to pivot back towards palm oil, especially in key markets such as India and China,” it said.