Palm oil prices surge sharply, little hope of relief in June
Global palm oil prices have reached a two-week record high. According to the Malaysian Palm Oil Board, prices are expected to remain strong at 4,400 ringgit per tonne in June. Amid expectations of declining exports from Indonesia, palm oil remains the most affordable option for Indian buyers.
Edible oil prices are once again experiencing significant fluctuations in the global market. Driven by rising biofuel demand and strong global sentiment, international palm oil prices have reached their highest level in nearly two weeks.
In the Malaysian market, prices have surpassed 4,600 ringgit per tonne. Commodity experts believe that this surge in vegetable oil demand due to biofuel policies will keep prices strong in June.
There is little hope of any softening in June as well.
Malaysia and Indonesia play a key role in the global supply of edible oils. Palm oil prices surpassed 4,800 ringgit per tonne in April.
However, some profit-booking followed, bringing prices down slightly. Strong buying resumed at lower levels and a rise in soybean oil prices have once again provided significant support for palm oil.
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According to the latest estimates from the Malaysia Palm Oil Alliance and the Malaysian Palm Oil Board (MPOB), crude palm oil prices are expected to remain stable at around RM 4,400 per tonne on average in June.
However, the period between March and October is considered the best time for palm oil production.
Dry weather during this period facilitates harvesting and increases the oil extraction rate from fresh fruit. This seasonal increase led to a slight increase in Malaysia's palm oil stocks in April, recording a modest increase of 2.31 million tonnes.
Soybean oil became expensive and got support
The US and European countries' biofuel policies have emerged as the biggest reason behind this surge in palm oil prices.
Due to strong demand from the US biofuel sector, soybean oil prices in Europe reached their highest level since November 2022 in mid-May. This surge has made soybean oil the most expensive major vegetable oil in the world.
- Soybean oil is trading at a premium of US$145 per tonne over rapeseed oil.
- It remains US$110 per tonne more expensive than palm oil.
- Its prices are higher than sunflower oil at US$45 per tonne.
MPOB says that these recent changes in the US biofuel industry have made palm oil very price competitive in the international market, which is directly benefiting its demand.
A relief for Indian importers
From the perspective of the Indian market and consumers, palm oil remains the most economical choice.
According to an MPOB statement, palm oil is the most competitively priced vegetable oil in India. Malaysian palm olein prices are slightly lower than Argentine soybean oil, leading Indian buyers to prefer palm oil.