*Palm oil compete for a 31% share in the global vegetable oils market
*World total edible oil production is 243 million ton, in which palm oil share is 79.5 million-ton
Palm oil is once again in the news after the U.S. blocked imports from one of the world’s top producers, a move that may restrict access for the edible oil and undermine the industry’s efforts to clean up its image. Palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange was up 2.3% at 2,777 Ringgit ($669.64) on Tuesday. It was posted a loss of 1.2% for September, its first decline since April.
Prices were supported by bullish recovery in soy oil futures on the CBOT overnight and some bargain buying from key support levels helping palm oil to trade higher. Tracking gains in soy oil on the Chicago Board of Trade (CBOT) following a USDA report that showed stockpiles were lower than expected. Palm oil is affected by price movements in related oils as they compete for a 31% share in the global vegetable oils market.
The global palm oil market demand was estimated at 74.6 million tons in 2019 and is projected to register a volume based CAGR of 2.3% from 2020 to 2027. Palm oil is affected by price movements in related oils as they compete for a 74.6 million ton share in the global vegetable oils market. Malaysian palm exports jumped 10.5% in September from earlier months, cargo surveyor Amspec said. The data should give some support later as Amspec released.
Palm oil prices may decline slightly towards the end of this year from the current strong level, said IOI Corp Bhd group. Due to oil palm crop production likely increasing gradually from September to November this year while the demand is expected to taper off from the high restocking activities in the major importing countries. While the demand for palm oil has recovered from the lows during the early days of the Covid-19 pandemic, from higher exports mainly led by improved demand from India and China.
After Indonesia, Malaysia is the world's second largest producer of palm oil. Together with Indonesia, the two countries dominate the global market, producing 85% of the $65 billion supply. World total edible oil production is 243 million ton, including which palm oil share is 79.5 million-ton, soy oil 56.74 million-ton, rape oil 24.73 million-ton, sun oil 21.94 million-ton, cotton oil 4.41 million ton and groundnut 4.37 million ton.
Separately, the US Customs and Border Protection (CBP) banned Malaysian palm oil producer FGV Holdings Bhd’s products after a year-long investigation that the agency alleges showed abuse, deception, physical and sexual violence, intimidation and the keeping of identity documents. However, this barely had any impact on prices, the trader said, as buyers can import from other plantations.
(Disclaimer: This analysis is only for educational purpose and is not and must not be construed as investment advice. It is analysis based purely on economic theory and empirical evidence. Readers are requested to kindly consider their own view first, before taking any position.) Date: 2-10-2020