Palm oil prices may fall to two-year lows

On May 7, the palm oil market continued to come under pressure. Industry analyst Dorab Mistry pointed out at a conference in Dubai that palm oil futures prices may be expected to fall to a two-year low of RM3,500 (about US$826.50) per tonne as Malaysian and Indonesian palm oil production enters a seasonal pick-up from June to November, with loose supply driving up stocks.

The benchmark palm oil contract for July delivery on Bursa Malaysia Derivatives fell 38 ringgit, or 1 percent, to 3,754 ringgit by midday on the day. Notably, the contract had touched a two-year high of RM5,202 in November last year.

Mistry pointed out that with the soybean oil price adjustment, palm oil price competitiveness has recovered, but to regain market share still need to continue to maintain price advantage. India, for example, as the world's largest palm oil importer, its share of palm oil in vegetable oil imports for the period from November 2023 to March 2024 has fallen from 61% to 43%.

He also mentioned that Indonesia's recent tightening of its export policy for waste cooking oil and palm oil mill effluent to prioritize domestic biofuel demand has pushed U.S. soybean oil futures stronger. Meanwhile, benefiting from China's high tariffs on Canadian commodities, rising export demand for Indian rapeseed meal in the Chinese market may drive growth in oilseed crushing, which in turn will reduce India's overall import demand for vegetable oil.