Malaysian palm oil futures barely reacted to inventory drawdown to 19-month low

According to the Malaysian Palm Oil Board (MPOB), during December 2024, the country's palm oil stocks decreased by 6.91% to a 19-month low of 1.71 million tons, production decreased by 8.3% to the lowest level since March 2024 of 1.49 million tons, and exports decreased by 9.97% to a 6-month low of 1.34 million tons, OleoScope reports.

Malaysian palm oil stocks have been falling for the third consecutive month due to production cuts caused by severe floods, and have already fallen to their lowest level since May 2023. At the same time, palm oil consumption in the country rose by 53% in December to 309,000 tonnes.

In January, palm oil stocks are expected to rise to 1.76 million tonnes, exports to 1.38 million tonnes, and production to decline to 1.48 million tonnes.

Amid a sharp rise in soybean oil prices in Chicago, March palm oil futures on the Bursa exchange in Malaysia rose 2.26% on Friday to 4,393 ringgit/t or $977.7/t (+0.57% for the week), although analysts had expected a more significant increase.

Soybean oil futures on the Chicago Board of Trade rose 6.8% on Friday amid a lower forecast for the U.S. soybean crop, which will support palm oil prices in the near future.

According to surveyors, palm oil exports from Malaysia fell by 21.4–26.8% between January 1 and 10, which will somewhat limit price growth.

Amidst tightening sanctions on oil exports from the Russian Federation, oil prices continue to rise, which will become an additional factor supporting vegetable oil prices in the coming weeks.