By Cheryl Tan / theedgemalaysia.com
KUALA LUMPUR (Feb 15): Malaysian Palm Oil Council (MPOC) expects Malaysia’s palm oil prices to remain resilient, trading above RM3,700 in February, with resistance expected at RM3,950, despite the weak global demand for the vegetable oil.
“Malaysia’s palm oil stocks declined to a six-month low of 2.02 million tonnes, marking an 11.83% decrease and production also dropped to a nine-month low of 1.4 million tonnes, following the inventory trend,” MPOC said in a statement on Thursday.
Despite a 9.9% month-on-month (m-o-m) decline to 1.4 million tonnes in January, palm oil production marked a 1.59% increase year-on-year (y-o-y), achieving its highest January level since 2019, which signals the extension of 4Q 2023’s upward trend into 1Q 2024.
Meanwhile, February’s palm oil production is likely to decrease due to the short month of 29 days overlapping with Chinese New Year, reducing harvesting days and is expected to dip below two million tonnes amid strong domestic demand before Ramadan.
The strong January palm oil prices were mainly fuelled by reduced production from the monsoon and increased demand preceding Ramadan, Chinese New Year and Hari Raya Aidilfitri celebrations.
“Palm oil has become less price-competitive due to declining soft oil prices, with its prices in Europe as of Feb 13 surpassing soybean, sunflower and rapeseed oils by US$38 (RM181.64), US$35, and US$37 respectively, leading global traders towards soft oils and potentially stabilising their prices in February and March, while palm oil prices are expected to stay steady,” it added.
Due to weak global demand, major vegetable oil prices experienced a sharp decline in January, with soybean oil exports from Brazil and Argentina dropping by 53% and 35% respectively and a 22% decline in US soybean exports in the last quarter of 2023.
Concurrently, a 7% y-o-y decrease in China’s December 2023 soybean imports to 9.82 million tonnes further illustrated the diminished demand for soybeans.
Edited By Isabelle Francis
News Credit: The Edge Malaysia
