Malaysia warns palm oil market uncertainties and volatility will persist in 2023
The edible oil market is grappling with volatility caused by fears of recession, Russia’s invasion of Ukraine and governments limiting exports to protect domestic food supplies.
Benchmark crude palm oil prices in Malaysia hit a record high of 7,268 ringgit ($1,586.21) a tonne in March, but prices have since fallen by around 40%.
The “palm oil situation is likely to remain uncertain in 2023,” Malaysian Palm Oil Council chief executive Ahmad Parveez Ghulam Kadir said in a webinar presentation.
The balance between supply and demand will be influenced by changing weather conditions, labor situation, currency volatility and political and geopolitical instability, he said.
It won’t be “as easy as it has been in recent years,” when participants were able to time the market, he said.
In the near term, palm oil supply disruptions due to tropical storms in major producers Indonesia and Malaysia are expected to continue into the first quarter of 2023, keeping prices high, Ahmad said. Achieve.
The monsoon season is picking up in Malaysia and has caused flooding across the country, the world’s second-largest producer of palm oil, over the past week.
The state agency Malaysian Palm Oil Council (MPOC) said flood-related supply problems combined with a weaker ringgit would keep edible oil prices between 4,000 and 4,400 ringgit per ton until the end of December.
Prices would be 3,900-4,300 ringgit until March 2023, and would drop further to 3,800-4,200 ringgit in the second quarter, said MPOC chief executive Wan Aishah Wan Hamid.
The futures contract was trading at 4,172 ringgits ($910.52) as of midday Monday.
The MPOC expects Malaysia’s crude palm oil production in 2022 to decline for a third year to 18.08 million tonnes, from 18.1 million tonnes last year. It sees Indonesian production increase from 44.7 million tonnes to 46.6 million tonnes in 2021.
($1 = 4.5820 ringgit)
(Reporting by Mei Mei Chu; Editing by Kanupriya Kapoor and Bradley Perrett)
By Mei Mei Chu