KUALA LUMPUR: Palm oil prices are projected to find support at RM3,900 a tonne in June, as the combined supply from Malaysia and Indonesia is expected to tighten in the latter part of 2024, along with an upsurge in palm oil exports.
The Malaysian Palm Oil Council (MPOC) said price increases are likely to be capped at RM4,150 due to the United States Department of Agriculture (USDA) projected production surplus of oilseeds for 2024 and 2025.
"Palm oil prices are poised to see further upward movement in June as production growth in Malaysia is expected to slow down in the second half of 2024, while exports are on the rise," MPOC said.
"From January to May 2024, Malaysia has demonstrated impressive palm oil production and export performance, with production increasing by 9 per cent (626,000 tonnes) and exports rising by 7 per cent (393,000 tonnes)," it said in a statement.
The country's palm oil stocks also experienced a marginal increase of 0.5 per cent to 1.75 million tonnes, despite a strong 13 per cent rise in production.
"This limited inventory growth was due to demand outstripping supply. Malaysia's palm oil production rose by 203,000 tonnes in May, while combined exports and domestic consumption increased by 212,000 tonnes," it noted.
Compared to Indonesia, it witnessed a decline in crude palm oil production by 647,000 tonnes (5.0 per cent) from January to March 2024, according to Indonesian Palm Oil Association (GAPKI) data.
"Consequently, the combined palm oil production in Malaysia and Indonesia is estimated to have decreased by half a million tonnes in the first quarter of 2024 (1Q24)," it said.
Despite Malaysia's positive production growth, the combined palm oil inventory growth for both countries is anticipated to be marginal," the MPOC added.
Furthermore, in the European market prices saw rapeseed, sunflower and soybean oil increased by 6 per cent, 8 per cent ad 7 per cent respectively, while palm oil declined by 4 per cent.
MPOC said the shift raised the premium of soft oils over palm oil from US$40 to US$115, bolstering Malaysian palm oil exports.
"Looking ahead, the USDA's initial estimate predicts a 4 per cent rise in global oilseed production for the 2024/25 marketing year, leading to a projected 6 per cent increase in global oilseed stocks, the highest in a decade."This indicates ample oilseed supply anticipated for the coming year," it added.