For the Quarter Ending December 2024
North America
During the entire Q4 2024, the U.S. Palm Kernel Oil (PKO) market was significantly influenced by the global rise in PKO prices, particularly due to tight supply conditions and increased demand. The upward trajectory of prices globally, fueled by weather disruptions in major producing countries like Malaysia and rising export demand, led to heightened procurement costs in the U.S. market.
The seasonal surge in demand from the food, cosmetics, and biofuel industries in the lead-up to the holiday season placed further pressure on U.S. importers to secure adequate supplies, driving up import prices. Furthermore, the U.S. economy experienced cautious sentiment as global economic factors, including oil price fluctuations and potential monetary policy shifts from the U.S. Federal Reserve, created uncertainty in commodity markets. Nevertheless, U.S. importers and traders were compelled to adjust to the rising PKO prices, with the strong demand from food and oleochemical sectors ensuring that the U.S. market remained active.
The appreciation of the U.S. dollar relative to other major currencies, including the Malaysian ringgit, partially mitigated the impact of higher PKO costs for U.S. buyers, but the overall market sentiment remained cautious as PKO prices rose due to the tightening of global supplies and robust seasonal demand.
Asia Pacific
In Q4 2024, Malaysia's Palm Kernel Oil (PKO) market saw rising prices driven by tight supply and strong global demand. Adverse weather, including monsoons, reduced palm kernel yields, limiting raw material availability. The depreciation of the Malaysian ringgit also raised production costs while making exports more competitive. Rising demand, particularly from the food, cosmetics, and biofuel industries ahead of the festive season, further fueled price increases. The Manufacturing PMI in Malaysia remained at 49.5 in October, reflecting five months of factory decline, though foreign sales saw growth due to stronger demand from Asia-Pacific. PKO stock levels fell by 6.32% to 1.88 million tonnes in October, creating supply constraints. By late November and December, supply chain disruptions, labor shortages, and adverse weather worsened output, driving up prices. Increased export demand ahead of anticipated price hikes also contributed. Additionally, sustainability regulations, such as RSPO compliance, raised production costs. Prices dipped temporarily in mid-December due to weakening rival oils and a drop in the ringgit. However, underlying demand from global markets, along with recovering soybean oil prices, suggested potential stabilization. The market remains favorable, with traders adjusting strategies to maintain a positive outlook.
Europe
In Q4 2024, Germany's palm kernel oil market followed global trends with rising prices driven by tighter supplies and geopolitical factors. In October, European prices surged, supported by heightened global demand and supply constraints caused by adverse weather in key producing regions. Limited availability in the Netherlands further exacerbated price hikes, while the depreciation of the Euro against the U.S. dollar bolstered export prices. November saw continued volatility in the Netherlands, influenced by supply chain disruptions and fluctuating demand. Logistical challenges and delays from major producers like Thailand and Malaysia affected supply consistency, while global crude oil price fluctuations added to price uncertainty. Demand remained uneven, with higher consumption in the oleochemical sector and restocking periods. Refining capacity fluctuations and inventory levels also contributed to price oscillations. In December, Crude Palm Kernel Oil (CPKO) prices surged due to tight supply, rising crude palm oil futures, and stricter sustainability regulations. Export restrictions from key producers like Indonesia further constrained the market. While coconut oil prices remained stable, palm kernel oil import prices in the Netherlands continued to rise, reflecting strong demand for sustainable oils and currency fluctuations.
For the Quarter Ending September 2024
North America
Throughout Q3 2024, North American Palm Kernel Oil prices experienced a significant increase, aligning with broader trends in the Asia-Pacific region. This rise was propelled by both supply and demand factors, notably robust demand from end-user sectors that drove importers to focus on building inventories. Market players, responding to these favorable conditions and aiming for profitability, refined their pricing strategies to capitalize on this trend and sustain competitive positioning.
Furthermore, the situation was further exacerbated by slowing production growth in key producing nations including the Malaysia and Indonesia, the world’s leading Palm Kernel oil producers. Persistent high demand from major importing nations including the United States collectively resulted in a strained supply side, making it difficult for merchants to keep up with the continuous rise in demand. Additionally, a consistent rise in freight costs contributed to the elevated pricing environment, as logistical expenses added another layer of cost that market participants factored into their strategies.
Overall, the market sentiment throughout the quarter remained positive, underpinned by strategic pricing adjustments and inventory management efforts. The edible oil sector showcased adaptability, with traders navigating changing conditions to maximize gains while reflects a dynamic and growth-oriented period for the North American Palm Kernel Oil market, with resilient demand and pricing tactics helping to shape a bullish outlook in the broader edible oil landscape.
Asia Pacific
Moving forward to Q3 2024, the Palm Kernel Oil pricing in the APAC region remained robust, reflecting a consistent market sentiment, driven by a confluence of factors. Strong demand from various sectors, including food, biofuels, and oleochemicals, played a significant role in fueling the price surge. Merchants consistently encountered significant hurdles in the broader supply landscape due to insufficient inventories, which posed challenges in replenishing stocks. This shortfall impeded their ability to meet the rising demands and inquiries from both downstream sectors and the overseas market. The situation was further exacerbated by slowing production growth in Malaysia and Indonesia, the world’s leading Palm Kernel oil producers. Persistent high demand from major importing nations like India and China also contributed to the robust Palm Kernel oil prices.Malaysia witnessed substantial price changes, reflecting the broader regional trends. Importing regions strategically capitalized on currency fluctuations, adopting cost-effective procurement strategies to mitigate financial risks amidst dynamic market conditions. This preference for long-term contracts signifies a high level of confidence among market participants regarding the trading sentiment of Palm Kernel Oil demand and pricing trends throughout the quarter. Overall, the market exhibited more than around 23% increase from the previous quarter, highlighting the steady upward trajectory in pricing. Ending the quarter on a high note, the latest price of USD 1320/MT of Crude Palm Kernel Oil FOB Klang from Malaysia solidified the overall increasing sentiment in the pricing environment.
Europe
In Q3 2024, the European Palm Kernel oil market witnessed a significant upward trend in prices, driven by a complex interplay of global and regional factors. High global demand, supply constraints, and macroeconomic fluctuations all contributed to the price surge. Market disruptions, compounded by adverse weather conditions in major producing regions, led to delayed shipments and limited availability of spot market goods thereby leading the suppliers within the region to raise their selling prices of already accumulated stocks. The Netherlands experienced the maximum price changes, with traders facing challenges in meeting the robust demand. As consumers and businesses competed for a limited supply, the inability to meet this demand exacerbated the supply-demand imbalance. Market speculation and consumer sentiment played a role in amplifying these price hikes; anticipating further increases, market participants engaged in speculative purchasing, further tightening supply. Overall, the quarter saw a 24% increase in prices compared to the previous quarter. Overall, the pricing environment has been positive, marked by steady price rises. The quarter-ending price for Crude Palm Kernel Oil CFR Rotterdam in the Netherlands stood at USD 1520/MT, reflecting the ongoing upward trajectory in prices.
For the Quarter Ending June 2024
North America
Throughout the entirety of the second quarter of 2024, the prices of Palm Kernel Oil mirrored market trends in the APAC region. The overall trend in the market was characterized by a price drop, driven by several key factors.
Starting with April, the market witnessed an upside-down trajectory with prices dropped considerably. From a Supply-side perspective, the Palm Kernel Oil market has witnessed an adequate supply to cater to the demands of end-user industries such as pharmaceuticals, food, and preservatives. However, operational dynamics have led suppliers and manufacturers to prioritize clearing existing inventories over further processing, influenced by high storage costs and declining market inquiries. As a result, the overall vegetable oil market remains sluggish, with falling prices impacting the supply-demand dynamics. Key traders have reduced their buying activities due to the more competitive pricing of alternative edible oils like soybean, which has diminished the appeal of Palm Kernel Oil imports.
This situation was further compounded by a rise in freight cost and trade dispute ahead of red seas issue which further kept the overall imported cost on the upper side, thereby affecting the overall trade outlook. However, the market witnessed a steady rise in the middle of the quarter which continued throughout the end i.e., June 2024.
Asia Pacific
In Q2 2024, the Palm Kernel Oil (PKO) market in the APAC region experienced relatively stable pricing despite several factors influencing market dynamics. A key driver was the balanced interplay between supply and demand, consistent throughout the quarter. In Malaysia, a leading producer, the market witnessed a downward trajectory with stable demand. April 2024 saw muted market sentiments due to recovering production in Malaysia and lower export rates. Decreased prices of rival edible oils and cautious trading ahead of recent market trends further dropped PKO prices. Sufficient stock levels in major import countries like the European region, India, and China, following past import rises, supported weakened market sentiments. In May, prices rebounded steadily, marking a balanced supply-demand sentiment. Adequate supply catered to demands from end-user industries like pharmaceuticals, food, and preservatives. However, rising input costs due to higher inflationary trends pushed PKO prices higher. Downstream trades and firms raised their selling prices, resulting in higher export prices during the month. This trend continued until late June, with a persistent rise in regional and overseas inquiries. By the end of Q2, export prices from Malaysia were at USD 1040/MT. China followed similar market trends seen in producing nations. Steady demand from the food processing and oleochemical industries, coupled with speculative trading activities, balanced the overall supply side, keeping market sentiments stable. However, speculative trading activities exacerbated the price decline. Traders anticipating further market softening engaged in selling frenzies, flooding the market with excess inventory, intensifying the downward spiral of import prices. Despite stabilization efforts by industry stakeholders and regulatory bodies, ample supplies, tepid demand, and speculative pressures eroded PKO import prices in China until May. In June, prices rebounded modestly, balanced by stockpiled inventories among traders and suppliers. The price change from the same quarter last year was 0%, while the percentage change from the previous quarter in 2024 was recorded at 2%. The quarter concluded with imported Crude Palm Kernel Oil priced at USD 1115/MT in China, reflecting overall weakened market sentiment for Q2 2024.
Europe
In Q2 2024, Palm Kernel Oil (PKO) pricing in Europe experienced an overall downward trajectory, driven by a combination of factors influencing the market. Weak exports, low demand from european nations, and a narrowing spread between Palm Kernel Oil and soy oil were putting pressure on the contract thereby resulting in a reduced imports from key producing nations. Simultaneously, currency depreciation, notably the weakening of Euro against foreign currencies such as the US dollar during this week, contributed to the increased cost of imports for importing nations. As a result, traders remained highly reluctant in making newer purchases instead focused on destocking their previously stocked up inventories. Lastly, adding up to this Palm Kernel Oil was also impacted by price movements in related oils, as they competed for a share of the global vegetable oils market. The general preference for alternative edible oils in the terminal catering industry throughout the nations led to a continued decline in inquiries concerning palm Kernel oil, resulting in an overall weakened market transaction scenario. However, the market witnessed a modest resurgence in the end of the quarter. Industry analysts provide a nuanced view of the Palm Kernel Oil market's supply side which remained more than sufficient with respect to the inquiries arriving from the regional market. The surplus of Palm Kernel Oil in the market has prompted significant adjustments in pricing mechanisms, reflecting the ongoing trend. Analysts point out that these adjustments were necessary to maintain competitiveness and manage excess inventory. The export trajectory for Palm Kernel Oil was improved slightly with traders actively focused on clearing their already stocked up inventories first. As a result, when compared to the previous quarter of the same year, the market demonstrated a 2% rise. Finally, concluding the quarter, the imported price of Crude Palm Kernel Oil in the Netherlands stood at USD 1175/MT, reflecting an overall pessimistic trend with steady rise in the end.
For the Quarter Ending March 2024
North America
Throughout the entirety of the first quarter of 2024, Palm Kernel Oil prices reflected prevailing market trends in the APAC region. The overarching trend witnessed was a notable increase in prices, driven by several key factors including the limited arrival of the product, consistent rising demand, and trader disruption ahead of the Red Sea dispute.
A significant driver behind the price hikes was the marked shortage in inventories, prompting market players to adjust their pricing strategies to safeguard profit margins. Given the USA's substantial reliance on importing Palm Kernel Oil from the Malaysian market, fluctuations in Malaysian provinces exerted a profound influence on the overseas market of trading nations.
Furthermore, the escalated container freight rates emerged as a significant catalyst contributing to the price surge, notably impacting industries reliant on maritime transport. However, challenges such as supply chain disruptions persisted until mid-Q1, resulting in imbalanced logistic activity that impacted the overall demand side of the market. As a result, due to inadequate built-in inventories and delayed fresh supplies, prices soared in exporting regions. In response, market players in the US resorted to bulk orders to secure sufficient stocks, further exacerbating the price increase. As Q1 ended in March 2024, the easing of freight costs and the appreciation of the dollar against producing nations' currencies provided some relief to downstream trades and suppliers, enabling them to procure goods at lower costs.
Asia Pacific
Throughout Q1 2024, Palm Kernel Oil (PKO) prices in the APAC region were influenced by several factors, notably in China where significant price fluctuations occurred. Heightened downstream purchases and limited arrivals from major producing regions like Malaysia drove price increases. Increased local consumption and the depreciation of the Chinese Yuan against the US Dollar further fuelled this trend. Festive celebrations briefly disrupted trade momentum, exacerbating supply-demand imbalances, and leading to a temporary pause in production activities and trading. This operational hiatus exacerbated supply-demand imbalances, prompting increased stockpiling of products ahead of the Lunar New Year festivities. Moreover, In Malaysia, heightened demand from downstream sectors, particularly oleochemical industries, drove price hikes due to reduced production in east Malaysian states which considerably affected the trade momentum as supplies continued to remain low concerning the export market’s inquries . Adverse weather conditions also constrained output, leading to decreased output and supply constraints throughout the quarter. The onset of Ramadan in mid-March increased demand for food staples, tightening supply and potentially pushing up prices for other oils, including PKO. Responding to increased buying interest, overseas buyers consistently restocked their shelves with higher inventories, facilitated by the devaluation of the Malaysian ringgit against the US dollar, making the product more affordable for end-users in dollar terms.
Europe
In Q1 2024, Palm Kernel Oil (PKO) pricing in the Europe region saw a modest increase, influenced by various factors beyond the usual top three. The primary drive was a sustained surge in domestic demand coupled with limited inventories among the suppliers, contributing significantly to the upward price trend. Furthermore, these insufficient inventories were exacerbated by a temporary trade slowdown ahead of weakened production witnessed among the exporting nations owing to less availability of palm kernel and fruits, restricting product availability to the importing nations including Europe. Further, import momentum faced continued disruptions, impacting PKO availability across the region. The situation in the Red Sea added complexity, affecting deliveries to Europe, African countries, and the USA. Shipping companies like Maersk rerouted ships to avoid potential attacks by Houthi rebels, leading to increased freight rates from production hubs like Indonesia/Malaysia to import destinations such as Hamburg or Rotterdam. This rerouting strategy led to higher prices in importing regions until late February. Additionally, as PKO is linked to palm oil production, disruptions in palm oil supplies due to production issues resulted in declining PKO stocks. This, coupled with sustained spot market demand, led to depleted supplies and upward pressure on prices, notably in the Netherlands as merchants persistently encountered substantial hurdles amidst prevailing market conditions with flagging suppliers. Furthermore, easing freight rates has exerted some resilience, which was countered by currency devaluation, providing higher cost support to the Palm Kernel oil market. As the depreciation of the Euro against the dollar occurred, merchants considerably traded their limited inventories of Palm Kernel oil at relatively higher costs, surpassing the highs from a month before.
