The Malaysian Palm Oil Board expects prices to fall in April under pressure from reduced demand

The Malaysian Palm Oil Board (PMOB) forecasts that crude palm oil (CPO) prices will return to the range of RM3,800-4,000/t in April 2024 (from the current RM4,250/t) under pressure from active soybean oil supplies from South America and gradual seasonal recovery of palm oil production in Malaysia.

The premium for palm oil compared to other vegetable oils has outpaced soybean and sunflower oil prices on the European market since February. According to MROS, palm oil currently trades at a premium of $40-95/t compared to competing oils, and its prices, against the background of a shortage of offers, have risen to an annual maximum and are 10% above the price level of February 2023. At the same time, palm oil stocks in Malaysia in February fell by another 5% to the lowest level since July 2023 of 1.919 million tons against the background of reduced imports and stable domestic consumption.

According to MROS forecasts, in 2024 the global production of palm oil will grow by at least 0.11%, soybean oil - by 2.88%, rapeseed oil - by 3.48%, and sunflower oil - by 3.94%.

However, the increase in palm oil quotations limits the reduction of palm oil imports from India and China due to the excessively high price.

According to SEA estimates, in February, compared to January, India reduced palm oil imports by 36% to a 9-month low of 497.8 thousand tons, and soy oil by 8% to 172.9 thousand tons, while sunflower oil imports increased by 35 % to 297.1 thousand tons.

Experts from the Indian Vegetable Oil Producers' Association (IVPA) believe that in 2023/24, India will reduce its import of vegetable oils by 5% compared to the previous season, from 17.06 to 16.2 million tons, while the share of palm oil in the total imports will decrease from 60% to 54% (or even 50%) because its prices are higher than those of soybean and sunflower oil.

According to the State Administration of Customs of China (GACC), in January-February the import of vegetable oils amounted to 1.21 million tons, in particular palm oil - 390 thousand tons, which is 12.4% and 37.1% lower than the same figures in 2023, respectively.