According to the Malaysian Palm Oil Council (MPOC), crude palm oil prices are expected to remain supported by tighter production conditions and strong demand from top buyers India and China.
MPOC chief executive Belvinder Kaur Sron told the business daily The Edge Malaysia that Malaysia’s benchmark palm oil prices are seen trading within a range of 3,800-4,200 ringgit per metric ton in the second half of 2024.
The momentum of Malaysia’s palm oil production growth is expected to slow in the second half of the year due to a high base effect, after output levels in the same period in 2023 rose to the highest since 2018.
The combined palm oil production of Indonesia and Malaysia, the world’s top two producers of the commodity, also showed a supply deficit of 200,000 tons from January to April 2024. During this period, Malaysian palm oil production increased by 440,000 tons, while Indonesia’s production decreased by 640,000 tons.
“The slowing production growth in both Malaysia and Indonesia, coupled with stable demand from India and China, will keep palm oil prices robust,” Belvinder was quoted as saying. She added that global supplies could tighten further if Indonesia increased its biodiesel blending rate to 40% next year.
MPOC forecasts that Malaysia’s palm oil production will increase by 2.4% to 19 million tons in 2024, while exports are expected to rise 3.1% to 15.6 million tons. However, the country’s palm oil inventory will remain under pressure for the rest of this year, with an estimated level of around 2 million tons by December.
The tighter supply conditions and strong demand from major importers are expected to support palm oil prices in the coming months, according to the MPOC.