A weak start to 2025 for Malaysian palm oil prices
1 RM (Malaysian Ringgit) = 0.22 USD
1 USD = 0.82 GBP
*Note, exchange rates are for January 21, 2025
The Malaysia Crude Palm Oil settlement price has been trading at its lowest value since October 2024 in the first half of January as the increases made in late 2024 have disappeared.
The 16th January price was at RM4,291/tonne (US$945), which is 3.4% less than the beginning of the month, although RM10 (US$2.20) above the lowest point of the month so far on the 9th January. Prices rallied from that date to RM4,492/tonne (US$988) on the 13th but then fell rapidly.
Current values contrast to two-and-a-half-year highs as recently as the middle of December. The current price is 10% lower than a month ago, but 11.7% higher than a year ago and 39.6% less than the all-time high set in April 2022.
Malaysia CPO Settlement Price RM
Analysis: Small exports and lower vegetable oil prices weigh on Malaysian palm oil
Malaysian palm oil prices have come under pressure from a weak start to the global vegetable oil market and the smallest exports of palm oil from the country in five years.
Weaker soy oil and Indonesian palm oil prices have weighed on the Malaysian palm oil price over the last few days. The prospect of a large Brazilian soy crop is also a factor.
Reduced stocks of Malaysian palm oil have meant there is less product available for export. The availability of palm and other vegetable oils from other countries means that the reduction in Malaysian output has not tightened the market. Intertek Testing Services, which monitors the market, estimates that exports are down 15.% on last year in the first half of January. Rival company AmSpec Agri puts the reduction at 23.7%.
Reuters analyst Wang Tao suggests that prices may stabilise at RM4,250/tonne, before bouncing back to above RM4,350 or even RM4,400/tonne.
The palm oil challenges and opportunities of new EU deforestation rules
The EU’s upcoming deforestation law will be a challenge for Malaysia’s palm oil industry, but could also provide it with opportunities because of the sustainability measures put in place by the country.
That was the view of Malaysia’s deputy minister of commodities, Chan Foong Hin, during a recent industry conference. He urged delegates to understand the impact of the new rules that are due to come into force at the end of the year. The EU had wanted to introduce the regulation, which requires suppliers of a range of products to the European Union to provide proof of sustainability and traceability, at the end of 2024 but delayed them to give it and others more time to adapt to them.
Malaysia and Indonesia have expressed concern about the new rules, saying they disproportionally impact the palm oil industry and underestimate other reasons for deforestation. If the new law limits exports from Malaysia, Indonesia and other countries, that would increase prices and impact their economies which rely on trade.
Deputy Minister Chan said that the palm oil industry has extra time to prepare for the regulations, which it should use to enhance and prove its sustainability credentials.
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.