Taking support from the crude oil market and a rise in U.S. soybean oil futures, Malaysian palm oil futures built on last week’s gains and settled at a three-month high on Tuesday. Technical buying was also a factor behind the gains.
In December, 2018/19 global palm oil production was projected to rise 4 percent from 2017/18, the fourth consecutive season of growth despite an increase in ending stocks to over 10.5 million metric tons. Since then, Oil World has lowered projected growth for 2019 Indonesian palm oil, although production is still expected to rise year over year, and Malaysian production is seen holding relatively steady. The governments of Indonesia and Malaysia are promoting palm oil use for biodiesel production as a way to lower stocks.
The consensus in the industry is that global demand for palm oil is on the upswing for both food and energy production. In December, USDA forecast global palm oil exports at 52 million metric tons, up 6 percent from the previous season, with top-exporter Indonesia thought to export 7 percent more in 2018/19 and Malaysia pegged to export 6 percent more. Will that happen? Malaysia’s Q4 2018 exports strengthened from their midyear slump but were nearly unchanged from Q4 2017. It’s still early in the season, however, and a strong showing in Q1 2019 may put Malaysia’s exports on track. Indonesia shipped 15 percent more palm and palm kernel oils in Q4 2018 vs. a year ago; demand is expected to decline in Q1, however.
Malaysian palm oil production, exports, & stocks
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