Malaysia palm oil prices ease for two-and-a-half-year highs
1 RM (Malaysian Ringgit) = 0.22 USD
1 USD = 0.79 GBP
*Note, exchange rates are for December 16, 2024
There was pressure on the Malaysia Crude Palm Oil settlement price in the first half of December 2024. The price began the month just below the RM 5,000 (US $1,100) mark, but soon rose above it and hit a high for the month of RM 5,127/tonne (US $1,128) on the 5th.
The price fell to RM 4,850/tonne (US $1,067) by the 11th of the month, before rallying a little. The mid-month price of RM 4,938/tonne (US $1,086) was 0.5% lower than the start of the month, 1.3% less than the month before, 31.1% more than the recent September low, but 30.5% less than the all-time high in April 2022.
Malaysia CPO Settlement Price RM
Analysis: Floods hit palm oil production, with price premium over soy impacting exports
Malaysian palm oil production was at a four-year low in November, with stocks down for the second month in a row. Crude palm oil production dropped by 9.8% to 1.62 million tonnes, the lowest for the month since 2020, according to the Malaysian Palm Oil Board. There was also a 14.7% decline in palm oil exports to 1.49 million tonnes. That meant palm oil stocks fell by 2.6% in the month to 1.84 million tonnes. A previous Reuters survey had forecast November production of 1.69 million tonnes, exports of 1.52 million tonnes and end-of-month stocks of 1.79 million tonnes.
Exports have fallen because of a high palm oil premium over soy oil, while Malaysian production has been impacted by floods in the country. There are expectations that further heavy rain could reduce December production.
Indonesia will increase its palm oil use for biodiesel in 2025
The global palm oil market will be influenced by a new Indonesian biofuel mandate in 2025. Currently, there is a requirement for a 35% biodiesel mix in diesel, which will increase to 40% in 2025, reports Context News. The change will require 18 million kilolitres of crude palm oil, a 50% increase compared to 2023. Indonesian think tank Essential Services and Reform estimates that the projected potential demand for biofuel in Indonesia could be 190 million tonnes by 2050.
The increase in Indonesian biofuel use is being driven by a policy of moving away from coal to produce electricity, with a shift to diesel-fuelled power stations. Currently, coal accounts for two-thirds of Indonesian power generation. Although driven by environmental needs, the shift to biodiesel has drawn criticism from conservation groups who fear it will mean the loss of rainforests as new palm oil plantations are established.
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.