WILLAGRI
Palm oil is experiencing a new boom in the global vegetable oil market. According to the analysis firm Platts, tropical oil is currently enjoying renewed interest from Indian buyers who are increasing their supplies from Indonesia and Malaysia. This craze is the consequence of a gradual reversal of the market. Indeed, while palm oil has been shunned since last November due to its high price and has lost its title of most affordable vegetable oil to soybean oil in the meantime, the trend has been reversed in favour of the former.
With the production outlook improving, the build-up of inventories in Malaysia and the fall in oil prices making it less attractive as a feedstock for biodiesel, palm oil prices have fallen in recent weeks. Since the beginning of April, prices for the benchmark palm oil contract on the Bursa Malaysia Commodity Exchange have fallen 10.5% to end at $924.3.
According to market data relayed by Platts, palm oil is sold at a discount of $50 per ton compared to soybean oil, whereas last March, the latter was $70 to 100 cheaper than the most consumed oil in the world. This situation has prompted several Indian refiners to place orders to replenish their palm oil stocks. While April data is not yet available, analysts point out that India’s monthly purchases of the vegetable oil are still expected to exceed the volume of 424,599 tonnes reached last March, a stock already up 13.7% month-on-month. In the world’s most populous country, palm oil accounts for more than 60% of total vegetable oil purchases, which are around 14 million tonnes. According to observers, market developments will continue to be closely monitored in the coming weeks. The fluctuation in oil prices, favoured by uncertainties over trade negotiations between China and the USA, the prospect of a slowdown in global growth and fuel demand, the state of the soybean harvest in Brazil and Argentina, are all factors that can contribute to weakening or strengthening the competitiveness of palm oil on the global vegetable oil market.
Source: Ecofin Agency