Palm oil quotes continue to rise, but may soon turn to the downside

Palm oil stocks in Malaysia fell by 6.32% in October from 2.01 to 1.885 million tonnes amid a 1.3% decline in production to 1.79 million tonnes, according to the Malaysian Palm Oil Board (PMOB) report released yesterday. and increasing exports by 10.9% from 1.56 to 1.73 million tons.

 

The market did not expect such a reduction in stocks, so palm oil quotes rose despite the fall in the prices of oil and related vegetable oils.

 

December palm oil futures on Bursa Malaysia rose 1.9% yesterday to the highest level since July 2022 at 5,196 ringgit/t or $1,179/t (+14.7% for two weeks, +35% for the year) ).

 

Even the USDA's neutral balance on vegetable oils and the sharp reduction in exports from Malaysia in November did not stop the speculative growth of quotations.

 

January Brent oil futures for two sessions fell by 5.3% to $71.8/barrel (+1.4% for two weeks, -7.3% for the month).

 

December soybean oil futures on the Chicago Stock Exchange rose by 14.3% in two weeks of speculative growth, but yesterday fell by 1.5% to $1,060/t (+14.5% for the month) amid profit-taking by traders. , not reacting to a sharp decline in the forecast for soybean production in the United States.

 

Against the background of rising prices, exports of palm oil products from Malaysia for November 1-10 decreased compared to the corresponding period in October by 15.8% to 429.5 thousand tons (according to estimates by Intertek Testing Services) and by 14.6% to 419,000 tons. 1 thousand tons (according to AmSpec Agri Malaysia).

 

According to the forecasts of Sunvin Group experts, in 2024/25, India will reduce the import of vegetable oils compared to the previous season from 9.32 to 9.1 million tons, in particular sunflower oil - from 3.52 to 3.2 million tons, although it will increase the import of soybean of oil from 3.56 to 3.7 million tons thanks to a decrease in its price.

 

The decision by the Thai authorities, due to the rise in palm oil prices, to reduce its content in biodiesel from November 21 from B7 to B5 will increase the pressure on quotations in the near future.

 

Lower oil prices due to reduced demand from China and Trump's plans to increase production in the US will limit demand for biodiesel from vegetable oils, which will increase their use in the food industry.