August 20, 2021

Palm prices triggered by tight supply begin to decline from the mid-August rally

1 RM = 0.24 USD
1 USD = 0.73 GBP

Crude Palm Oil

Average July Palm Oil Export Prices

• Indonesia $1,273/tonne (+$61/tonne from June)

• Malaysia $1,079/tonne (+$68/tonne from June)

Average 2021 Malaysia Palm Oil Prices $/tonne

Malaysia palm market

With local COVID-19 related lockdowns throughout southeast Asia contributing to labour shortages and transportation challenges, tight palm supplies drove a bullish market coming out of July.

• July 1 CPO settlement price 3710 RM/tonne ($875.62)
• July 29 CPO settlement price 4427 RM/tonne ($1,044.84)

Prices quickly turned volatile at the start of August, seeing a decline towards the middle of the month.

• August 2 CPO settlement price 4120 RM/tonne ($972.39)
• August 8 CPO settlement price 4511 RM/tonne ($1,064.67)
• August 19 CPO settlement price 4238 RM/tonne ($1,000.24)

CPO started to make a come back following its dip on the 19^th, closing at 4316 RM/tonne ($1,021.30) on August 23.

• Price recovery being attributed to COVID-19 outbreaks in different areas of the supply chain
• Southern Peninsula Palm Oil Millers’ Association estimates August 1-20 production to have risen 11.5%

Exports

Analysts predict exports to decrease while production increases towards the end of August, leading to greater inventories.

Palm oil shipments from August 1-20 were down between 8.7% and 11.5% from the same period in July.

Performance of the Malaysian Palm Oil Industry

Palm oil prices are influenced by competing vegetable and oilseed markets which saw notable movement throughout July. 

Soybeans

Average July Soybean Oil Export Prices

• US $1,554/tonne (-$54/tonne from June)
• Argentina $1,244/tonne (+$53/tonne from June)
• Brazil $1,273/tonne (+$39/tonne from June)

• US soybean oil’s reduced price reflects a reduction in demand
• Argentina is expected to have an additional 500,000 tonnes of soybean oil for export after the country cut its domestic biodiesel blending requirements in half
• Brazil’s domestic biodiesel industry is urging oil imports, expanding domestic soybean oil demand

Low water levels in South American rivers create soybean export challenges  

Paraguay and Parana Rivers are facing the lowest water levels following two years of extremely dry weather.

• The Parana River is at its lowest in 75 years, reducing loadings from Argentina’s main loading facilities at Rosario and San Lorenzo by 20%
• Soybean and soybean products are seeing shipping cost increases due to being barged further down river for loading. While export volumes are still recovering from previous years, the figure should be higher than what is currently seen
• Brazil soybean meal exports are forecast to reach a record 17.3 million tonnes, with analysts saying this large volume is partially propped up by Argentina’s shipping challenges

Rapeseed oil

Hot and dry growing conditions have had a major impact on Canada’s rapeseed crop this year. Canada has represented more than 60% of global trade over the last four years making this decrease notable on the global market.

• 2021 production forecast reduced more than 4 million tonnes in August
• Average yield reduced nearly 20%
• Rapeseed supplies forecast declined more than 20% for the lowest level in nearly a decade
• Not including North America, global rapeseed supplies are up more than 2%
• Increased exports from Eastern Europe and Australia are expected to help offset Canada’s decline
• Impact is expected to be most difficult for importers China and EU with substitutions of other protein meals and oils likely to be necessary

Sunflower oil

Disclaimer: The information in this document has been obtained from or based upon sources believed to be reliable and accurate at the time of writing. The document should be for information purposes only and is not guaranteed to be aDisclaimer: The information in this document has been obtained from or based upon sources believed to be reliable and accurate at the time of writing. The document should be for information purposes only and is not guaranteed to be accurate or complete. ccurate or complete.