Malaysia palm oil prices rise to 12-month high

1 RM (Malaysian Ringgit) = 0.21 USD
1 USD = 0.78 GBP

*Note, exchange rates are for March 15 2024

Malaysia palm prices Mar 24 Update

Malaysia’s Crude Palm Oil settlements reached 12-month highs in the first half of March, with a steady increase throughout the two-week period. The price was 3935RM/tonne (US$827) at the beginning of the month. By 15th March it had reached 4288RM/tonne, an increase of 9.0%.

The latest mid-month price is 414RM or 10.7% more than in mid-February and 6.7% more than a year ago. Despite the rapid rise in prices over the last month, the current price is still 39.6% less than the all-time high set at the end of April 2022.

Analysis: Reduced production means increased palm oil prices, with longer term support also predicted

Weather concerns, lower palm yields and higher prices of alternative oils have helped drive palm oil prices up over the last month.

Malaysia’s palm oil stocks at the end of February were at their lowest in seven months, with a drop in production outweighing a slowdown in exports. Soyoil prices have edged up this week. There has also been a 5.0% increase in sunflower oil prices since the beginning of March, with a similar increase in rapeseed prices, although they have taken a downward turn in the last two days. Crude oil prices rose 2.5% in the first half of the month.

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There could be support for palm oil prices throughout the rest of this year, a panel of analysts told a recent meeting in Kuala Lumpur.

Supplies are under pressure, with global output expected to grow by only 0.2 to 0.3 million tonnes this year, which would be the smallest increase in four years, forecasted analyst Thomas Mielke. He added that that palm oil stocks in the world’s largest producer, Indonesia, are low and they are shrinking in Malaysia. Fellow analyst Dorab Mistry said that a lack of plantation expansion and the ageing of palm trees is holding back production, with less investment in palm oil technology than in other types of vegetable oil production.

Compulsory palm oil usage for biodiesel is another factor that is likely to support palm oil prices in the future. There is a possibility that the new Indonesian government could increase its palm oil biodiesel requirement from 35% to 40%, according to Fadhil Hasan of the Indonesia Palm Oil Association. One candidate is even arguing for a 50% palm oil inclusion rate.

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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.