OIL Malaysian palm oil is projected to trade between RM3,800 and RM4,200 a tonne for the period up to the second quarter of 2023 as palm oil production is expected to recover slightly next year.
The Chief Executive Officer of the Malaysian Palm Oil Council (MPOC), Wan Aishah Wan Hamid said that higher demand for palm oil, fluctuations in Brent crude oil prices and geopolitical tensions remain factors in determining the direction of price movements.
He said that since the last few weeks, the price of palm oil has started to see an upward trend due to the weaker Malaysian ringgit and concerns about supply due to floods in Indonesia and Malaysia.
This will ensure that the price of palm oil remains high and stays between RM4,000 and RM4,400 a tonne until December 2022, he said.
“For the medium term, the ongoing Russian and Ukrainian crises will remain a factor and palm oil supply growth is likely to plateau next year.
“The price is likely to remain between RM3,900 and RM4,300 a tonne until March 2023,” he said during a presentation at the Palm Oil Internet Seminar (POINTERS) on Monday.
In terms of palm oil stocks, Wan Aishah said, Malaysia’s palm oil stocks are in a decreasing trend from December 2021 to April 2022, causing higher prices to be recorded because stock levels have an inverse relationship with prices.
He said however, since May 2022, stock levels have increased and prices have decreased.
In September 2022, local palm oil stocks exceeded 2.3 million tonnes, the highest level in 18 months and the price of palm oil continued to decline to the lowest level since June 2021, he said.
Meanwhile, local palm oil production is expected to decrease for the third year in 2022 as the lack of farm workers continues to affect the harvest in the country.
MPOC projects CPO production in Malaysia in 2022 to reach 18.08 million tons.
He said however, as the world’s largest producer, Indonesia will record a slight increase in palm oil production contributed mainly by the newly matured palm oil plantation areas.
Palm oil production in Indonesia is projected to reach 46.6 million tons.
“The current rainy season is expected to result in floods that will further reduce production in both countries,” he said.
Wan Aishah said the global palm oil production forecast in 2022 was 77.2 million tonnes while consumption was 76.8 million tonnes.
Palm oil will still maintain its position as the world leader in oil and fat supply, he said.
POINTERS, a web seminar organized by MPOC, highlights the theme of ‘Mitigating The Next Wave Of Market Uncertainties’ for this edition.
A total of eight presentations will be made covering topics such as the importance of palm oil in the uncertain edible oil situation, the performance of the palm oil industry, approaches to overcome global palm oil challenges and the palm oil hub for East Africa.
The four-day seminar ends on 18 November 2022. – Bernama
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