For the Quarter Ending June 2023
Throughout the North American region, the prices of Palm Kernal Oil (PKO) witnessed a mixed market trajectory as the prices continued to rise at the beginning of the second quarter. The importing activity was moderate, while the supplies from exporting nations, primarily Malaysia, one of the largest exporters of Palm Kernal Oil, were weak, which disturbed the overall market trend until April 2023. Moreover, moving towards the middle of the q2, the prices fell considerably across the globe with weak regional trade activity and higher stocks at the warehouses. In addition, numerous economists and business professionals reported that the US inflation rate was declining. Despite falling energy prices, there was still significant underlying inflation that exceeded the Federal Reserve's target rate. Due to their high inventory levels, domestic producers were able to meet local demand despite the challenges. However, the food inflation rate in the US increased to 10.1% in May 2023 from 8.6% in April. Following the declining trend when Q2 concludes, the prices of Palm Kernal Oil stabilized across the United States with a moderate surge in demand from the domestic market balanced by the overall supplies presented by the merchants.
Across the APAC region, Palm Kernal Oil (PKO) prices showcased a varied price trajectory in Malaysia, one of the significant exporters of PKO. During the first half of Q2 2023, there were erratic trends in the price of palm kernel oil in Asia. Prices mostly changed near the top of the curve. During the quarter shift, some reverse fluctuations were seen, but those were primarily due to increased consumption during the holy month of Ramadan, which led to increased demand and constrained supply. Moving forward, prices of PKO steadily dropped in the region around the middle of Q2, which was attributed to high outputs from Malaysia and other major producers of palm oil, as well as weak demand for the product from suppliers. Also, in May 2023, amid weaker demand, the Malaysia Manufacturing PMI fell to 47.8 from 48.8 in April, marking the 9th consecutive month of decline and the biggest drop since January 2023. For the ninth consecutive month, new orders decreased; the most recent decline was the steepest in three months due to reports of demand restraint on both the domestic and global markets. For the fifth month in a row, suppliers' delivery times were shortened, and purchasing activity fell to its lowest level in nearly two years. While as Q2 ends, The National Palm Kernel Oil Board reports that palm kernel oil inventories increased at a slower-than-anticipated rate as production fell and exports rose. Additionally, the Manufacturing Purchasing Managers (PMI) reported a YoY of 47.7 in June, which was slightly less than the YoY of 47.8 in May. The domestic retailers had an adequate supply of inventory to meet the region's overall demand.
Palm Kernal Oil (PKO) prices in the European market during Q2 2023 mirrored those in Asia Pacific. Prices for palm kernel oil increased across the board at the beginning of Q2. Prior to Ramadan, the main cause of the supply disruption came from exporting countries, particularly Malaysia, which was one of the major exporters of PKO to the Netherlands. This had an effect on the availability of all cooking oils in the nation, including palm kernel oil. The weaker market fundamentals, on the other hand, caused prices to decline significantly after April and end Q2 on a negative note with frequent fluctuations. Market demand declined for this month as a result of consumers' cautious wait-and-see attitude and the high-cost inflation brought on by the conflict between Russia and Ukraine. Additionally, as June drew near, prices stayed steady, maintaining a balance between the region's overall supply and demand dynamics. Due to higher stockpiles among the merchants successfully balancing the overall demand, traders did not place many quotations throughout June.