The Palm Oil Market saw Malaysian palm oil futures reverse their upward trend on Tuesday, closing after a four-session rise. The benchmark November contract on the Bursa Malaysia Derivatives Exchange edged down by 2 ringgit, or 0.05%, settling at 3,922 ringgit ($902.65) per metric ton. A 1.4% gain earlier in the session failed to hold as market participants sought clarity in the face of conflicting global demand signals.
China’s subdued purchasing activity contrasts sharply with an oversupply situation in India. Lingam Supramaniam, director at Pelindung Bestari, highlighted the market’s unease, pointing to India’s potential increase in import duties on edible oils, which could further complicate the landscape.
Indonesian palm oil output is projected to decrease to 52-53 million tons in 2024, a drop from 54.84 million tons last year, according to estimates by the Indonesian Palm Oil Association. Anilkumar Bagani, research head at Sunvin Group, noted this projection, signaling tighter supplies ahead.
Prabowo Subianto, Indonesia’s president-elect, addressed the impending European Union deforestation regulation (EUDR), viewing it as an opportunity rather than a setback. He advocates for redirecting a significant portion of Indonesia’s palm oil production towards biodiesel, with plans to mandate a 50% palm oil-based biodiesel blend early next year—a move projected to slash fuel import costs by $20 billion annually.
To bolster its competitiveness in the face of waning global demand, Indonesia’s trade ministry is considering revisions to its palm oil export tax. Senior official Isy Karim, speaking to Bisnis, indicated the government’s intent to adjust policies strategically.
Meanwhile, the global vegetable oils market reflects this volatility. Dalian’s soyoil contract advanced 1.76%, and its palm oil contract gained 1.56%. Conversely, the Chicago Board of Trade’s soyoil prices saw a 0.64% decline. Palm oil prices remain sensitive to fluctuations in these related oils, as competition for market share intensifies., unpredictable demand from major markets, and strategic reorientation by key producers likely shaping the future trajectory.
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