April Shows a Spike in Palm Oil Prices; What Do Experts Say?

According to an industry analyst, Malaysian Palm Oil prices are predicted to increase by approximately 4,000 ringgit per tonne in the second half of 2023 due to the development of the El Nino weather pattern. Furthermore, on the Bursa Malaysia Derivatives Exchange, benchmark Palm Oil futures fell to 3,740 ringgit ($843.29) per tonne. The El Nino phenomenon's hot, dry weather is likely to reduce yields in the two main producers, Indonesia and Malaysia, which further drive up the price of edible oil globally.

Previously the cheapest oil, Palm Oil is now more expensive than Soya and Sunflower Oils. The cost of Palm Oil has risen over the last two weeks of March and continues to surge until the end of April. Problems with supply and demand in the domestic and international markets are one of the main factors supporting this upward market trend for the product. The Black Sea export corridor between Russia and Ukraine is another aspect that is likely to keep the market trend for Palm Oil on the northern side.

Besides this, according to market experts, Palm Oil futures will struggle between 3,400 and 4,000 ringgits until a weather issue materializes if the Black Sea export corridor is open. As per the record, the core monthly demand for Palm Oil is 5 lakh tonnes. Last year, when it was less expensive, there was a monthly import of 10-11 lakh tonnes of Palm Oil. For Crude Palm Oil (CPO), it was assumed by market experts that it would stay the same throughout the month of April. In addition, 3.5 lakh tonnes of Soy Oil, 2-2.5 lakh tonnes of Sunflower Oil, and 6 lakh tonnes of soft oil will likely be imported, with India producing a good amount of rice bran oil and mustard oil. Concerns about the Black Sea grain corridor arrangement led to an increase of more than 3% in Malaysian Palm Oil futures in April.