Today palm oil market fell to below MYR 3,320 per tonne, As we say in our previous report, while this approaching the two-and-a-half-year low of MYR 3,200 touched on May 31st amid evidence of lower demand and strong supply.
Early cargo surveyors showed that exports of Malaysian palm oil products fell by 16.7%-17.6% from the previous month in the first ten days of June.
Meanwhile, The developments were affected by stronger competition from the world’s top producer, Indonesia, as oversupply in its domestic market spurred higher exports.
In the meantime, data from the Malaysian Palm Oil Board showed that inventories were at 1.67 million tonnes in the end of May, 12.6% higher than the previous month to mark the first buildup in four months. Inventories were built on the back of strong production in the period, with domestic output jumping by 27% to 1.52 million tonnes, firmly above expectations of 1.45 million
As the India’s palm oil imports in May were a 27-month low as importers switched to cheaper soy oil and sun oil according to six major Indian oil importers. Soy oil in the US is not cheaper than palm oil, but Brazil’s soy oil is. The reason is Brazil does not use soy oil for SAF production.
Similarly the average soybean yields in Argentina were 3%-4% higher than in Brazil’s. In recent years, Argentine beans yield has been 17% below Brazil’s soybean yields. The Brazilian trend yield grows at a rate that is 3 times faster than Argentina’s. What is the difference? Argentina has 20 to 32% export tax on all agriculture commodities to fund the federal government. Brazil does not. The more taxes paid mean less incentive and less money available to invest for improved production efficiency.
However China raised their vegetable oil import projections last Saturday. That shot Malaysian palm oil futures up 3% as traders covered short positions (bought to offset earlier sales) ahead of several palm oil reports on Monday. Despite palm oil futures being up 3.25% Friday, the price of palm oil finished lower for the second consecutive week, but this week just 0.41% lower.
While as per the today report benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange slid 19 ringgit, or 0.56%, to 3,348 ringgit ($725.15) per metric tonne.
Exports of Malaysian palm oil products for June 1-10 fell 17.6% from the same period in May, independent inspection company AmSpec Agri Malaysia said on Saturday. Another cargo surveyor, Intertek Testing Services said shipments fell 16.7%.
Malaysia’s end-May palm oil inventories rose for the first time in four months, up 12.63% from April to 1.69 million metric tonnes, according to Malaysian Palm Oil Board (MPOB) data released during the midday break.
The Palm oil market is affected by price movements in related oils as they compete for a share in the global vegetable oils market. However our analysis team once again predicted that palm oil will trade in ranges of 3,200RM To 3,700 RM Ranges in the next Week
Here is the total production chart