Industry expert Julian McGill forecasts a significant surge in palm oil purchases by India and China in the immediate future, driven by attractive prices following recent market corrections.
Speaking at a palm oil forum in Jakarta on Tuesday, McGill, Managing Director of Glenauk Economics, stated, “We feel in the short term, those markets will come back. We see heavy buying from India, China.” He expressed confidence, adding, “We’re not worried for the next year about a build up in stocks.”
This anticipated buying spree comes after Malaysian palm oil prices, which climbed nearly 20% in 2023, have dropped approximately 12% year-to-date. This decline has restored palm oil’s competitive edge against rival oils like soyoil, which it had lost during the previous high-price period.
McGill highlighted specific drivers for each major buyer:
- India: After reducing imports since December, Indian buyers are returning “strongly” for June-August shipments. This resurgence is fueled by palmolein (refined palm oil) currently trading at a discount compared to alternative oils.
- China: Physical importers in China are also actively securing cargoes for June-August delivery. McGill noted, “The Chinese buyers may stock up quite a lot because their stocks are relatively low.”
He predicts this renewed demand from Asia’s giants will support palm oil prices within a range of 3,900 to 4,200 ringgit per metric ton over the next six months. (The benchmark Malaysian FCPO contract closed at 3,864 ringgit on Tuesday).
McGill emphasized that the longevity of this demand surge hinges on palm oil maintaining its price competitiveness against other vegetable oils. He expects export volumes to peak around August.
Short Description: Industry expert Julian McGill predicts aggressive short-term palm oil buying by India and China, driven by price drops restoring competitiveness. This demand is expected to support prices and peak around August, contingent on palm oil remaining cost-competitive.