Palm oil prices slip a little during first part of July
1 RM (Malaysian Ringgit) = 0.21 USD
1 USD = 0.77 GBP
*Note, exchange rates are for July 15 2024
Malaysia’s Crude Palm Oil settlement price rose through much of the first half of July before slipping back. It opened the month at just short of RM4,000/tonne (US$840/tonne) and by the 3rd was at RM4,095/tonne (US$860/tonne). However, it then started to slip, reaching RM3,915/tonne (US$822/tonne) by the 10th of July, before rising a little.
The 15th July price of RM3,929/tonne (US$825/tonne) was 1.3% more than the price the year before and 44.7% lower than the all-time high price set in April 2022.
Analysis: Malaysian palm oil prices might be higher in 2024 despite record production
The Malaysian Palm Oil Association has increased its price expectations for crude palm oil futures this year. Its chief executive Jospeh Tek had previously said that the organisation expected 2024 prices to average RM3,800/tonne, but now says that the average could be between RM3,850/tonne and RM4,000/tonne.
The country produced 8.880 million tonnes of crude palm oil in the first six months of the year, according to the association, which was 10% more than the same period last year. June’s production was up 12% to 1.6 million tonnes, while Tek said that increased production in the second half of 2024 could mean annual output breaks the 19 million tonne barrier for the first time ever.
One factor that might limit an increase in palm oil production is the lack of labour, Tek warned. He said that a March 2023 government freeze on the hiring of migrant workers was impacting plantations’ ability to produce and extract oil, even after a temporary easing of the restrictions which has now been halted. As many as 80% of those working on Malaysia’s plantations are migrant workers.
Lower prices of alternative vegetable oils have pushed Malaysian palm oil prices down in the middle of July. The Malaysian price followed the Dalian (China) Commodity Exchange price for soy oil – it fell by 0.85% on Monday, while soy oil prices on the Chicago Board of Trade exchange have dropped by 2.0% since last week.
Other bearish factors include weaker oil prices following political uncertainty in the USA after the attack on presidential candidate Donald Trump. Estimates of larger Malaysian palm oil shipments than originally expected could also push down prices. A weakening Malaysian Ringgit is also having an impact.
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.