KUALA LUMPUR (Sept 18): Crude palm oil (CPO) prices are expected to remain steady at between RM3,850 and RM4,050 per tonne in September, according to the Malaysian Palm Oil Council (MPOC), despite the commodity approaching peak production season.
MPOC said this is mostly due to lower palm oil stocks in Malaysia compared to last year. In August 2024, Malaysian palm oil stocks rose to 1.88 million tonnes, the highest level in six months. In contrast, from September to November 2023, Malaysian palm oil inventories ranged from 2.3 to 2.4 million tonnes, "a level that is unlikely to be reached in 2024", according to the council.
"As the market anticipates a tighter palm oil supply in coming months, largely due to Indonesia’s upcoming implementation of the B40 biodiesel programme starting in January 2025, palm oil prices are expected to remain stable in September," MPOC said in a statement on Wednesday.
"However, as palm oil is trading at a premium over soft oils in key markets such as Europe and China, imports are expected to remain flat, which will likely cap palm oil prices at RM4,050," it added.
The monthly average prices of CPO was RM3,730 per tonne in September 2023, and RM3,741 in September 2022.
MPOC said Malaysian palm oil production increased modestly by 2.8% from July 2024 to 1.89 million tonnes in August, while exports declined by 9.8% to 1.52 million tonnes. Although exports in August showed a month-to-month decline, there was a significant increase of 24.5% year-over-year.
The appreciation of the Malaysian ringgit has also contributed to the strengthening of palm oil prices in the European market, said MPOC. In August, palm oil was priced US$5 (RM21.21), US$27, and US$43 higher than sunflower oil, soybean oil and rapeseed oil respectively, it said.
MPOC chief executive officer Belvinder Kaur Sron in July said CPO prices were expected to trade within the range of RM3,800 per tonne to RM4,200 per tonne in the second half of 2024, with production conditions remaining as the main factor influencing prices.
In the first half of 2024, CPO prices traded in the range of RM3,600 per tonne to RM4,600 per tonne.