The price of palm oil (Crude Palm Oil/CPO) on the Bursa Malaysia Exchange was observed to have corrected in the early trading session ahead of the weekend, Friday (13/4/2023) continuing its strengthening since yesterday’s trading.
According to Refinitiv, CPO prices in the initial trading session were observed to have fallen 0.6% to MYR 3,616 per ton at 08:00 WIB. Despite experiencing a correction, strengthening in yesterday’s trading brought the price up to level 3,600.
In trading on Thursday (12/10/2023) the CPO price closed up 2.45% to MYR 3,638 per ton. With this, within a month the price still fell 3.42%, and on an annual basis it was corrected by 12.84%.
The correction in CPO prices occurred due to weakening soybean oil futures prices and the availability of sunflower oil supplies at very competitive prices. Soybean oil futures on the Chicago Board of Trade BOc2 were down 0.23%, as of 1017 GMT.
The flood of cheap sunflower oil from Russia and Ukraine is putting pressure on palm oil prices as the two major producers take advantage of currency depreciation to grab a larger share of the vegetable oil market.
Despite increased demand from China and top producer Indonesia clarifying that it would not require exports via the new exchange, easing concerns about supply pressures, this sentiment was enough to limit losses.
Indonesia will launch a crude palm oil (CPO) futures exchange this Friday (13/10/2023), but will not require trading through the exchange, said the head of the regulator as quoted by Reuters.
Authorities in the Southeast Asian country previously planned to require all CPO exports to go through the exchange, to boost global palm oil prices and create benchmarks similar to those in Kuala Lumpur and Rotterdam.
“Anticipating that Jakarta will mandate exports, Indonesian sellers are rushing to clear inventories. However, currently, sales are unlikely to be aggressive, which will support prices,” said Anilkumar Bagani, head of research at Sunvin Group, a Mumbai-based edible oil broker.
Rising demand from China and cheap buying also helped futures recover from a three-and-a-half-month low. Malaysia’s exports of palm oil products on October 1-10 rose 12.5% to 29.6% from the previous month, according to cargo surveyor data.
On the other hand, Malaysian palm oil stocks at the end of September rose 9.6% to reach an 11-month high of 2.31 million tonnes, data from the Malaysian Palm Oil Board (MPOB).
Source : CNBC