Market Update from Malaysia

Palm oil prices experienced a significant surge of 4.7% in response to a 4% rise in global oil prices. The uptick was influenced by various factors, including attacks on Russian refineries by Ukrainian UAVs and forecasts of decreased oil supplies in 2024. Brent crude oil futures climbed by 4% to $85.4/barrel, providing support to palm oil futures on the Malaysian Bursa exchange.

Key Highlights

Price Surge: May palm oil futures on the Malaysian Bursa exchange rose by 4.7% for the week, reaching 4,287 ringgits/t or $911.7/t. This marked an 8.9% increase over the past two weeks, driven by the rally in global oil prices.

Export Trends:Export data revealed a notable uptick in palm oil product shipments from Malaysia during March 1-15. According to surveys by Intertek Testing Services and AmSpec Agri Malaysia, exports increased by 3.3% and 8.4% respectively compared to February.

Market Dynamics: Despite the price hike, palm oil remains competitively priced compared to soybean and sunflower oil. However, its exports are expected to decline in the near term, especially with a seasonal increase in soybean oil production in Argentina.

Soybean Oil Trends: May soybean oil futures on the Chicago Stock Exchange rose by 6.7% for the week to $1,088/t, driven by the overall rally in oil and palm oil prices. However, improving weather conditions in Brazil and Argentina are exerting downward pressure on soybean and soybean oil prices.

Sunflower Oil Market: Prices for sunflower oil with delivery to buyers increased by 3% to $845/t CIF. Despite the growth, increased supplies from the Russian Federation and reduced demand from the EU and Turkey are limiting further price increases.

Export Statistics: In January-February, the Russian Federation exported 881,000 tons of sunflower oil, marking a 35% increase compared to the same period in 2023. Notably, India emerged as the main buyer, surpassing China's imports.

Ukrainian Exports: Ukraine exported 603,000 tons of sunflower oil in February, representing a significant increase compared to February 2023 figures.

The palm oil market's response to global oil dynamics underscores the interconnectedness of commodity markets. As stakeholders navigate evolving conditions, close monitoring of trends and developments will be crucial for informed decision-making.

Source: GrainTrade