Malaysia Palm Oil: Tanzania Leads by One-Time Shipment Volume
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During Jan-Apr 2023 period, Malaysian Palm Oil exports to the South Asian region registered a total of 1,131,070 MT against 1,215,298 MT which was registered during the same period of last year, a decrease of 84,228 MT or by 6.93%. India holds the most significant market share of 69% as this region’s largest importer of Malaysian Palm Oil.
The decrease in Malaysian Palm Oil during this period could be attributed to the narrow price spread between Palm Oil and soft Oils in recent weeks that led to higher demands for soft Oils, as seen in major markets such as India. The Indonesian factor was also another driver that resulted in the decrease in Malaysian Palm Oil exports to this region.
Malaysian Palm Oil exports to India during Jan-Apr 2023 decreased by 14.08% from 912,032 MT to 783,663 MT, contributed by several factors such as rare Palm Oil premium over other edible Oils, high supply of soft Oils, and easing of Indonesian export policy. During the four months of 2023, Palm Oil imports from Indonesia have increased by 48% Y-o-Y reducing the imports from Malaysia with Indonesia easing its export policy. Imports from Thailand more than doubled compared to the previous year.
In April 2023, bumper South American soybean crop availability, the Argentinian soybean dollar scheme, along with cheaper availability of sunflower Oil have led to Palm Oil prices into a premium over soft Oils, which increased the share of soft Oils in total vegetable Oils imports to 49% from 35% during the previous month.
According to dealers and cargo surveyors, the attractive prices of Palm Oil have prompted buyers to cancel Palm Oil cargoes and replace them with soybean and sunflower Oils. It has been reported that Palm Oil has been replaced by sunflower Oil in many parts of the country due to the price competitiveness of sunflower Oil.
During the coming months, total vegetable Oil imports by India are estimated to increase by 100,000-200,000 MT, with an improvement in soft Oil imports. With the spreads still favoring the imports of soft Oils, Palm Oil imports are expected to stay around 500,000 MT in May, declining the stocks below 350,000 MT. Malaysia and Indonesia, the two largest Palm Oil suppliers to India, may lower their Palm Oil offers to regain market share from other edible Oils.
Production in the world’s second-largest producer is rocketing 21% to 1.45 million tons, the highest level since December. Supportive weather conditions, more harvesting days, and an improvement in yields compared to the previous month helped the surge in production, said Nagaraj Meda, managing director at TransGraph Consulting.
Exports are seen ticking up 0.7% to 1.08 million tons due to tougher competition from larger rival Indonesia, which recently lowered its export duties to raise exports. In terms of one-time shipment volumes, Tanzania led their export market with 24,800 tons in May 2023, followed by South Africa (22,000 tons), India (16,000 tons), and the Netherlands (16,000 tons), according to the AgFlow data. Total shipments hit 1 million tons in Jan-May 2023.
A recent downtrend in Malaysia’s benchmark crude Palm Oil prices, which have fallen 19% this year, has helped improve its competitiveness against soft Oils. Analysts said shipments from Malaysia are expected to improve from June onwards due to the rising production and improving demand from major destinations.
Malaysian Palm Oil Stocks
Malaysia’s Palm Oil inventories at the end of May are expected to rise as production swells to its highest this year while exports remain flat. Stockpiles are forecast to rise 6.8% from April to 1.6 million tons, snapping a three-month decline. That is about 5% higher than a year ago.
Other sources: MPOC
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