The Malaysian Palm Oil Council (MPOC) predicts that crude palm oil (CPO) prices are expected to decline to between RM3,800 and RM4,000 per metric tonne in April 2024 from the current level of RM4,250 per tonne.
The anticipated price drop is attributed to an oversupply of soybeans from South America entering the global market in April and onwards, coupled with the gradual seasonal recovery in palm oil production in Malaysia.
“With the low palm oil production season ending in March, palm oil prices may reflect the recovery in production levels and inventories in April and May, potentially limiting the rise in palm oil prices.
Additionally, the premium of palm oil prices over mixed oils continued to increase in March and has surpassed the prices of three major mixed oils simultaneously in the European market since February,” it said in a statement today.
According to MPOC, CPO prices traded at a premium of US$40 to US$95 per tonne (US$1=RM4.72) over mixed oil prices in March 2024, thus the anticipated recovery in mixed oil prices in April 2024 is expected to narrow the price spread.
“CPO prices soared to a 12-month high on March 15, 2024, exceeding nearly 10 per cent of the February 2023 closing price. The strong price trend can be observed in the first quarter of 2024, largely due to the dynamics of deficit supply growth,” it said.
In 2024, MPOC said global palm oil production is projected to increase by a minimum of 0.11 per cent, while soybean oil production growth is expected to increase by 2.88 per cent, rapeseed oil by 3.48 per cent, and sunflower oil by 3.94 per cent.
In terms of inventories, it said Malaysian palm oil stocks continued the declining trend in February 2024, dropping by five per cent to 1.919 million tonnes, marking the lowest inventory level recorded since July 2023.
“The reduction in palm oil inventories in February was due to reduced imports and strong domestic consumption,” it said.
MPOC added that it is unlikely that Malaysian palm oil stocks will experience any growth in March due to robust domestic consumption, especially during the Ramadan month, while production is not expected to increase until April and beyond.
