Volac Wilmar Feed Ingredient’s Palm Update
1 RM (Malaysian Ringgit) = 0.21 USD
1 USD = 0.79 GBP
*Note, exchange rates are for December 14
Price
The gains made in Malaysia’s Crude Palm Oil (CPO) settlement price in the second part of November have been lost in the first half of December. The price started the month at 3,879RM/tonne (US$815) but has dropped by 4.9% to 3,689RM/tonne (US$775).
Current prices are the lowest they have been since the beginning of November. They are 6.6% less than they were a year ago and half the value they were in early 2022.
Analysis: High stocks and El Nino will influence 2024 palm oil prices
Pressure on prices will remain until stockpiles of palm oil are cleared, analysts expect.
Hing Leong Investment Bank Research said that seasonally low production took place in November. It expects 2024 prices to range between 3,850RM/tonne and 4,000RM/tonne because of the impact of the El Nino weather pattern, with a strengthening of prices in the first half of 2024.
RHB Investment Bank Research expects EL Nino to peak in the second half of 2024 and anticipates that prices will remain under 4,000RM/tonne in 2024 and even into 2025. It says softer demand in the export market and high stocks will keep the lid on prices, with the bank predicting that Malaysian stocks will remain above two million tonnes.
But Affin Hwang Investment Bank predicts a more volatile ride for palm oil prices during 2024, with a changing climate and geopolitical tensions impacting production. That could push average prices for 2024 up to 4,400RM/tonne.
The World Bank also expects that El Nino will impact Indonesian palm oil production. It said:
“Palm oil production in 2023-24 will rise only by 0.2 million tonnes, much lower than the average annual growth of 2.5 million tonnes in the past ten seasons, as El Nino-related moisture deficits are reported in several parts of Indonesia between August and October.”
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 accurate or complete.