Palm Oil Prices Plummet Across the Globe at the Commencement of May 2023

The decline in Palm Oil prices during the month of May was primarily caused by weak demand before staging a partial recovery in the second half of the second quarter of 2023. Additionally, weak import demand from India and Mainland China kept market sentiments low. Numerous factors in the vegetable oil market exert pressure on the Palm Oil market. This is due to the US and Brazil's abundant supplies and large crop sizes. Market analysts claim that prices for other vegetable oils, such as Sunflower Oil and Soy, are currently lower than those for Palm Oil and that demand from many countries, particularly India and China, appears weak.

Purchases of Sunflower Oil have significantly increased in the global market since the opening of the export corridor (to the Black Sea region). As per the recent trend, the price of the Palm Oil contract on the Bursa Malaysia Derivatives Exchange fell, ending at around 3,393 Malaysian ringgit (MYR) per tonne. Palm Oil was the dominant commodity at over 4,200 MYR at the start of the year. Palm Oil is priced between 3,200 and 3,380 MYR due to an oversupply in the countries where it is produced. According to Hameed, prices are close to their lowest point, and the market needs a spark to rise temporarily amid Asian hot weather conditions.

According to dealers and cargo surveyors, India's Palm Oil imports decreased to their lowest level in 27 months in May as buyers decided to cancel cargoes and substitute Soy and Sunflower oil instead due to the oil's high premium over other edible oils. India, considered one of the largest importers of Palm Oils, unexpectedly reduced its Palm Oil imports, which maintained a downward price trend. Due to this, the two biggest producers of Palm Oil in the world, Malaysia and Indonesia, may lower their prices in an effort to reclaim market share from other edible oils.