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Supply Disbalance Pulling up Global Palm Oil Prices

Supply Disbalance Pulling up Global Palm Oil Prices

Supply Disbalance Pulling up Global Palm Oil Prices

  • 10-Jun-2022 8:23 AM
  • Journalist: Timothy Greene

As per the ChemAnalyst report, the price of Palm Oil has avidly increased in the last few months as the supply of the product was in a huge deficit due to the ongoing Russia-Ukraine war, which led to driving prices of Palm Oil to record highs.

Indonesia, the world's biggest producer and exporter of Palm Oil, accounts for about 60% of the global supply; on April 28 halted exports of Palm Oil in order to cool down the fuming cooking oil prices in the domestic market. ChemAnalyst data shows an increment of around 3% during the first week of June, owing to this prolonged volatility in the market. The Export ban was formulated in the wake of a severe shortage and skyrocketing prices of edible oil in the Southeast Asian nation.

Recently, the Indonesian government has permitted exports during May 2022, however, it set up strategies to protect homegrown stock, including the purported Domestic Market Obligation (DMO), under which manufacturers should initially sell a part of their product in their domestic market.

On the other side, ChemAnalyst data shows that Malaysia has also experienced an increase in the price of Palm oil by around 4% by the first week of June, owing to the labour crunch. Malaysia could not cope with harvesting all the oil palm seeds at the appropriate harvesting season set against the present limited labour force. As per the analysis, Malaysian estates hire labours mostly from Indonesia . However, Malaysia, in September 2021, had authorized the recruitment of 32,000 migrant workers for Palm Oil plantation to improve supply in the global market, but it failed to regain its labour size as foreign labour is yet to enter the country due to licence delay.

As per the ChemAnalyst data, Palm Oil prices are forecasted to remain buoyant during the forthcoming month, as the supply activities are unlikely to change.

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