KUALA LUMPUR (March 6): Crude palm oil (CPO) futures prices are expected to remain high at between RM4,200 and RM4,700 per tonne in the second quarter of 2023, said Indian Vegetable Oil Producers' Association president Sudhakar Desai.
CPO futures are currently trading at a four-month high, with the March contract closing at RM4,260 per tonne on Monday (March 6).
Sudhakar said the price reflects continued expectation that production of the commodity in both Malaysia and Indonesia will drop.
“In June 2023, it is possible that Malaysian stocks will go below two million tonnes, which can be a trigger by itself for the price outlook. But it is all very dependent on many factors such as China’s reopening and demand, Indonesia's policy, Ukraine-Russia crisis, Indian demand. There are so many uncertainties," he said.
Speaking at the UOB Kay Hian Palm Oil Outlook Seminar on Monday, Sudhakar said CPO futures prices are expected to normalise in the third and fourth quarters, at between RM4,300 and RM4,500 per tonne, as inventory levels are expected to remain stable.
“Going ahead in July, August and September, the prices are becoming a little bit normalised due to inventory levels remaining the same. Palm oil will retain its ability to find markets because the global market will react to palm oil demand or lack of it,” he said.
Sudhakar said India, the world's second-largest palm oil consumer, will import some 14.32 million tonnes of vegetable oils in 2022/2023, comprising 9.3 million tonnes of palm oil, 3.01 million tonnes of soybean oil, and 2.01 million tonnes of sunflower oil.
“India's edible oil consumption in 2022/23 has grown steadily due to a steep drop in prices coupled with demand. India's increased festival spending too points to higher imports of edible oil,” he added.
On a global scale, palm oil production is likely to reach 79.22 million in 2022/2023, a 10% uptrend from 2021/2022. In contrast, global demand for soybean is lower by 0.3% to 60.19 million tonnes.
Global palm oil production is estimated to grow 4.81% to 78.12 million tonnes, while soybean output is seen to increase 2.82% to 60.61 million tonnes.