MPOC optimistic on palm oil price in 2024, sees average price at RM4,000 per tonne

KUALA LUMPUR: The price outlook for palm oil remains optimistic in 2024, with an expected average trading price of RM4,000 per tonne, according to the Malaysian Palm Oil Council (MPOC).

In a statement today, it said the positive projection is rooted in the shifting supply and demand dynamics in Indonesia, which is moving towards a negative growth pattern following the implementation of B35 (35 per cent palm oil-based biofuel and 65 per cent diesel) in August 2023.

MPOC is forecasting a deficit of 0.24 million tonnes in Indonesia’s palm oil supply as domestic consumption for biodiesel and food is expected to increase by 0.64 million tonnes, with no expected growth in production.

“The deficit could further expand if exports exceed the forecasted levels, MPOC,” it said.

Meanwhile, MPOC said Malaysia’s palm oil stocks declined 4.64 per cent to 2.29 million tonnes in December 2023, reaching their lowest level in three months, in line with the trend in palm oil production.

It said the onset of El Nino has boosted Malaysia’s palm oil production in the final quarter of 2023.

MPOC said palm oil production in the fourth quarter of 2023 surged to its highest level since 2018, rising by 0.16 million tonnes to 5.27 million tonnes from 5.11 million tonnes, compared with the corresponding period in 2022.

“The production trend observed in the fourth quarter of 2023 is expected to persist into the first quarter of 2024.

“Therefore, it is projected that Malaysian palm oil production in 2024 will see a growth of one per cent, reaching 18.75 million tonnes,” it said.

According to independent global market analyst Oil World, global oils and fats production for 2023/2024 is projected to increase by 3.46 million tonnes.

“Consumption is expected to rise by 7.22 million tonnes, driven by increased biodiesel mandate requirements in the United States (US), Indonesia and Brazil.

“As a result, the world oils and fats dynamic is foreseen to experience a slight tightening in the second half of 2024,” it said.

MPOC said that despite the overall optimism for palm oil prices in 2024, it is anticipated that palm oil prices will trade lower in January, between RM3,600 and RM3,850, attributed to lukewarm demand from key importing countries and price competition from sunflower and rapeseed oil.

“In December, the price premium of sunflower and rapeseed oil over palm oil in the European market was only US$3 and US$39, respectively, owing to unusually high world crushing of sunflower seed and rapeseed in recent months.

“January and February are seasonally low-export months in Malaysia, with exports in January and February 2023 at 1.13 and 1.12 million tonnes, respectively,” it added. – BK