MPOC expects CPO prices to stay above RM4,000 in October amid market fluctuations

MPOC attributed the elevated prices to market uncertainties and a significant year-over-year (y-o-y) decline in Malaysia's palm oil inventories.

"Key factors influencing palm oil's supply and demand as we head into the final quarter of 2024 includeIndia's palm oil inventory levels, Indonesia's B40 biodiesel policy, and global production and consumption trends of the four major vegetable oils in 2025," MPOC said in a statement.

However, the council cautioned that weak energy prices, a supply surplus of soybean oil, and palm oil's price premium over soft oils may limit further price rallies.

It also noted that the strong export performance and early peak in production in Malaysia have contributed to a favourable price dynamic for palm oil, which reached as high as RM4,400 per tonne in October.

Malaysia's palm oil production peaked in August this year, two months earlier than in the past three years, which typically peaked in October, MPOC shared.

"Palm oil production in September declined 3.8 per cent to 1.82 million tonnes, with further seasonal reductions expected until the end of the year.

"Despite the production drop, Malaysian palm oil exports remained robust, posting a modest increase of 0.9 per cent to 1.54 million tonnes. September exports showed an impressive 27.3 per cent y-o-y growth," it noted.

From January to September 2024, Malaysian palm oil production rose by 1.15 million tonnes (8.7 per cent), while exports increased by 1.41 million tonnes (12.9 per cent).

Export growth exceeded production by 260,000 tonnes in the first nine months of 2024, resulting in a y-o-y decline in palm oil inventory, which stood at 2.01 million tonnes as of September 2024.

MPOC highlighted that palm oil stocks at Indian ports were significantly lower at 321,000 tonnes as of September 2024, compared to an average of 534,000 tonnes last year.

"These low stock levels suggest that India will likely increase palm oil imports ahead of the festive season, with an estimated 700,000 tonnes to be imported in October," it said.

MPOC noted that Indonesia's decision to raise its biodiesel mandate from B35 to B40 is projected to boost palm oil consumption by two to 2.5 million tonnes in 2025, further tightening export availability.

"This reduced supply is likely to provide additional support for palm oil prices," it added.

-- BERNAMA