KUALA LUMPUR (April 16): Crude palm oil (CPO) prices, which surged in March 2024 to hit a peak of RM4,327 a tonne, are expected to move within a stable range of RM4,000 to RM4,200 a tonne this month, according to the Malaysian Palm Oil Council (MPOC).

In the April 2024 issue of its Palm Pulse newsletter, the council said the dynamics of the palm oil market for the month are influenced by several key factors, namely increased palm oil production, improved palm oil imports, and a recovery in soft oil prices.

Anticipated higher month-on-month (m-o-m) palm oil production from April onwards is likely to limit any palm oil price rally, it said.

“Generally, the trend in palm oil prices aligns with its production and inventory trends, with prices typically strengthening from November and peaking in February or March,” it said.

On imports by key markets, the MPOC said that in the upcoming months, China and India are anticipated to ramp up their imports of edible oils to offset the bearish sentiment, resulting in rising production and stocks.

“The edible oil inventory in both countries has dwindled to its lowest level since November 2022.

“This decline is attributed to the significant reduction in edible oil imports by China and India from November 2023 to February 2024, with China experiencing a 34% decline and India a 21% decline compared to the corresponding period of the previous year,” it said.

According to the MPOC, soft oil prices, particularly for sunflower oil, are anticipated to rebound in the near term.

It said sunflower oil prices led the decline in the soft oil price dynamics from January to March 2024, largely due to the burdensome export supply from the Black Sea region.

“However, according to Oil World projections, sunflower oil production growth in the Black Sea region for the 2023/2024 marketing year is anticipated to occur in the first half of the season.

“Consequently, year-on-year (y-o-y) production is expected to decline from April to September 2024, suggesting that the price pressure from sunflower oil supply is poised to diminish moving forward,” the MPOC said.

In February 2024, Malaysia’s end-month palm oil stocks continued its downward trend for the fourth consecutive month, decreasing by 5% m-o-m to 1.92 million tonnes from 2.02 million tonnes in January.

However, on a y-o-y basis, the decline was steeper at 9.4% from 2.12 million tonnes in February 2023.

The MPOC said there was a significant rise in both exports and domestic consumption of palm oil in the first two months of 2024, collectively increasing by 174,264 tonnes from the corresponding period in 2023.

“However, production only experienced a modest increase of 27,944 tonnes during the first two months of 2024. This indicates that the surge in demand outpaced the growth in supply by a staggering 623%,” it added.