Some support for palm oil prices in the middle of August
1 RM (Malaysian Ringgit) = 0.23 USD
1 USD = 0.78 GBP
*Note, exchange rates are for August 15 2024
Malaysia’s Crude Palm Oil settlement prices edged downwards for most of the first part of August but did strengthen a little in the middle of the month. The first August price was RM3,965/tonne (US$912), down 3.1% on the month. Values then fell to a low of RM3,682/tonne (US$847) by the 13th of the month.
There was then a small recovery, with prices on the 15th July at RM3,761/tonne (US$865), which was 0.7% less than the year before and 47.0% lower than the all-time high in April 2022.
Malaysia CPO Settlement Price RM
Analysis: Smaller palm oil stocks than expected and higher crude values support prices
The Malaysian market was given some support in the middle of the month by smaller than expected palm oil stocks. They fell by 5.35% compared to the previous month to hit a four-month low of 1.733 million tonnes, announced the Malyasia Palm Board.
The drop in stocks came despite lower exports during the first two weeks of August than the first two weeks of July. Independent inspection company AmSpec Agri Malaysia reported a 22.3% drop in palm oil products in the 1 to 15th period, with cargo surveyor Intertek Testing Services suggesting the decline was 20.2%.
Another bearish factor is the lower price of alternative vegetable oils after larger harvests in North and South America. Soyoil prices in the Chicago Board of Trade exchange have been selling at near a three and a half year low. Lower vegetable oil demand from China has also weighed on the market, but that has been counter-balanced by increasing Indian demand with July seeing imports reach a one-year high in July.
The price of palm oil is influenced by the price of not only other vegetable oils, but also crude oil values. Oil prices had weakened after fears of a recession in the US following poor jobs figures, but they increased in the middle of the month amid estimates of shrinking oil and gasoline inventories and fears that an escalation of conflict in the Middle East could restrict oil supplies from the region.
Disclaimer: The information in this document has been obtained from or based upon sources believed to be reliable and accurate at the time of writing. The document should be for information purposes only and is not guaranteed to be accurate or complete.