Declines in Malaysian palm oil production, exports and stocks support sunflower oil prices

The Malaysian Palm Oil Board (MPOB) in its latest report lowered its estimate of Malaysia's oil production and reserves by more than analysts had expected, leading to a rise in quotes.

Yes, according to the report:

• Palm oil stocks fell 7.6% in January to a 21-month low of 1.58 million tonnes,
• production decreased by 17% compared to December to 1.24 million tons,
• exports decreased by 13% to 1.17 million tons.

Malaysia's palm oil stocks are falling for the fourth consecutive month, reducing export potential and forcing buyers to switch to cheaper soybean and sunflower oils.

April palm oil futures on the Bursa exchange in Malaysia rose 2% yesterday to 4,595 ringgit/t or $1,029/t (+5.2% for the week, +8.9% for two weeks).

Growth was limited by falling export demand from India and China, but traders expect demand to pick up in the near future, which will support prices.

Exports of palm oil products from Malaysia in the period from February 1 to 10, according to surveyor Intertek Testing Services, decreased by 3.9% compared to the corresponding period in January, while AmSpec Agri Malaysia estimates it increased by 6.4%. Such a discrepancy in statistics negatively affects prices.

Amid improving prospects for Brazil's soybean crop, March soybean oil futures in Chicago fell 1.7% for the week to $1,007/t, but are trading 0.6% lower than a month ago.

According to Trading Economics, the average price of sunflower oil delivered to buyers increased by 1.6% during the week to $1,309/t (+3.9% month-on-month) against the backdrop of reduced supply and increased demand. However, we should not expect an increase in demand for sunflower oil from China in the near future, which continues to import cheap soybeans from Brazil.

In 2024, China reduced its imports of sunflower oil by 39% compared to the previous year, from 1.5089 to 1.0853 million tons, due to increased processing of Brazilian soybeans.