Malaysian Palm Oil Council Russia's Post

Lower palm oil production, higher Ramadan Demand and tighter Indonesian exports support palm prices
2023/02/08 12:09 PM

2022/23 PALM OIL MARKET OUTLOOK UPDATE - FEBRUARY 2023

•    Regionally wet weather conditions reduced 2022/23 Indonesia palm oil production to 46.5 million metric tonnes (mt), down less than 1% from the last update

•    Elevated flooding risks and reduced planted areas lowered our 2022/23 Malaysia palm oil production estimate to 18.7 million mt, down less than 1% from the last update.

•    2022/23 world palm oil imports are estimated at 49.5 million mt, inching lower from last month's estimates at 49.6 million mt, and up 15.9% from the 2021/22 season. Global demand for palm oil is expected to be supported by persistent wide discounts of palm oil prices over rival vegetable oils, and prospects for higher import growth from key consuming countries.

•    The low crop season and unfavourable wet weather conditions in H2 January maintained high flooding risks, fuelling concerns over palm oil supplies. Meanwhile, there are also concerns over Ukraine's lower sunflower seed crop due to the war, drought, and low vegetation density in Argentina that will likely worsen soybean crop yields and the impact of La Niña transitioning into El Niño.

•    On the demand side, stronger Malaysian Ringgit and Indonesian Rupiah prompted palm oil to become slightly expensive for international buyers. High palm oil stocks in many key destinations (including China, India, etc.), the winter season, and the Lunar New Year holiday break curbed exports during January. However, demand for palm oil is expected to improve ahead of Ramadan, which falls in March 2022. Countries celebrating the festival will typically ramp up purchases to meet festive demand. Palm oil price discounts to rival oils remain attractive, which may still support palm oil purchases from importing countries.

•    Looking ahead, attention will be focussed on Malaysia's migrant worker arrivals, high flooding risks in the region, potentially tighter Indonesian palm oil exports and higher Ramadan festive demand. External factors that bear watching include the soybean crop development in South America, the Black Sea grain corridor and global recession jitters in 2023.
By: via Malaysian Palm Oil Council Russia