One of the main reasons for this is the increased competitiveness of palm oil against other oils and fats.
Recently, the palm oil market has seen an increase in demand and prices.
For example, on October 21, a ton of this product cost about $1,030, which is $10 more than the day before.
Palm oil futures also rose in price. Oil prices are currently at a 7-week high.
There are several reasons for its rise in price.
The weather puts the harvest in doubt
The main regions of the world where palm oil is produced are Indonesia, Malaysia, Vietnam, and the Philippines.
For example, in Malaysia, the production of crude palm oil in September was about 1.77 million tons.
By the way, this country accounts for 84% of the world’s palm oil production.
Over the past week, tropical cyclones have caused severe flooding and heavy rains in these countries.
Therefore, the question arose of whether it would be possible to maintain the harvest at the planned level. By the way, October-November is the time when you need to harvest.
Global butter consumption is growing
According to market laws, the higher the demand, the more opportunities for price growth.
And the demand for such products is growing today.
One of the main reasons for this is the increased competitiveness of palm oil against other oils and fats.
This led to palm oil exports from producing countries hitting a record 5.7 million tonnes in August. The main consumers are India and China.
For example, India purchased 270 thousand tons of this product.
This is a big positive for Malaysia: relations with India have not always been easy, for example, in 2020, she imposed an embargo on the import of Malaysian oil, which undermined exports and led to the fact that a lot of oil accumulated in warehouses.
However, if we compare the volume of oil exports from Malaysia, then today they are inferior to those of previous years, especially in 2019 and 2020.
What are the prospects for the palm oil market?
The conflict in Ukraine plays into the hands of its producers, since this country is the largest supplier of sunflower oil (a competing product).
And since sunflower oil began to rise in price from the very beginning of the conflict, so did palm oil.
As for demand, it is recovering after the pandemic, also because palm oil producing countries offer it at a good discount compared to other oils. Therefore, it is possible that this market will continue to grow.
