Palm oil bounces back after sinking to levels not seen since June 2021

June 02, 2023: Malaysian palm oil rose on Friday as trade talks with the EU were delayed by Indonesia and Malaysia over the palm oil dispute.

The benchmark palm oil contract rose by 2.41% to 3358 ringgit a tonne.

Palm oil has marked a decline for the third consecutive month, closing May with a fall of 4.10%.

Additionally, the benchmark is down 19.01% YTD and 53.33% YoY.

On Wednesday, the benchmark fell below 3251, the price that was last seen in June 2021.

Top producer Indonesia has set its crude palm oil reference price lower at $811.68 per tonne for the period June 1-15, making its export tax cheaper at $33 per tonne and levy at $85.

European Union (EU) has recently adopted a law to Ban the imports of products from land cleared of trees.

Trade talks with the EU are delayed by Indonesia and Malaysia as they seek better treatment for small-scale farmers.

Fadillah Yusof, Malaysia’s Deputy Prime Minister stated “punitive and unfair treatment towards us and to smallholders in particular”.

Indonesia and Malaysia are the world’s biggest palm oil producers and account for 85% of global palm oil exports, The EU is the third largest market.

The two countries sent top officials to the EU to express their concerns regarding the deforestation law, as it was a huge threat to local farming businesses.

The deforestation law would ban a variety of products, like beef, soy, and other commodities unless the companies could provide evidence that they were not grown on a land deforested after 2020.

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