Malaysian palm oil prices to drop on higher global vegetable oil output
MG News | March 27, 2024 at 01:45 PM GMT+05:00
March 27, 2024 (MLN): Malaysian benchmark crude palm oil (CPO) prices are poised to weaken from 2Q2024 on higher vegetable oil supply globally, says Fitch Ratings.
The credit rating agency believes that mild weather conditions and lower fertilizer costs will support output growth and sustain pressure on prices over the next 12-18 months.
Fitch’s benchmark price assumption for 2024 and 2025 is $700 per tonne (t).
It further foresees two key upside risks for CPO prices. First, poor weather conditions, due to a strong El Nino or La Nina event in the next 12 months. Second, a higher mandatory biodiesel blending ratio in Indonesia which will increase CPO consumption significantly.
Benchmark CPO spot prices have risen through 1Q2024 to above $900 per tonne by March 2024, from below $800 per tonne in December 2023, due to relatively low palm oil inventories in key producers Indonesia and Malaysia, and market concerns on global vegetable oil output.
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