Malaysian crude palm oil prices to stay above USD1,133 per ton in Sept: MPOC

KUALA LUMPUR: Malaysian crude palm oil prices were expected to stay firm above 4,600 ringgit (USD1,133.56) per metric ton in September on tightening supply and disruptions to global trade flows, the Malaysian Palm Oil Council said on Wednesday.

Palm oil production was expected to decline year-on-year in the fourth quarter, with output typically peaking in September or October, the industry body said in a statement.

Oil extraction rates (OER) were above 10-year averages from January to May due to favourable rainfall conditions six months earlier. However, OER declined significantly in June and July and was projected to remain below average for the rest of the year, it said.

Meanwhile, shipping disruptions in key waterways including the Bab al-Mandeb Strait, the Red Sea, and the Strait of Hormuz were expected to impact global vegetable-oil trade flows, the MPOC said.

Operations at several major ports and crushing plants in the Black Sea region have also been suspended following the renewed escalation of the Russia-Ukraine conflict, adding uncertainty to sunflower oil export availability over the next one or two months, it added.

“These disruptions are shifting vegetable oil demand in major importing markets such as India towards palm oil, particularly ahead of the festive season,” the MPOC said.

Prices were also expected to be supported by improved biodiesel economics, particularly in Indonesia, it said.

The MPOC said that downside risks remained, including an easing of Black Sea bottlenecks, the arrival of new-crop sunflower oil supplies in the export market and an improvement in geopolitical tensions leading to lower energy prices.

Crude palm oil prices last traded at 4,860 ringgit per ton on Tuesday.