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.
For the Quarter Ending December 2023
North America:
Throughout Q4 2023, Palm Kernel Oil prices in the APAC region exhibited a nuanced pricing trajectory, characterized by a significant decline in October, followed by a November upswing and a moderate drop in December.
In October, the notable decrease in Palm Kernel Oil prices was driven by a surplus in the domestic market. Concurrently, the domestic acid market displayed moderate trading activity with a stable supply side, emphasizing order-centric sales and market transactions. However, November witnessed a contradictory trend as Palm Kernel Oil prices experienced a positive upswing.
This was fueled by a sudden rise in downstream purchasing activity domestically and an optimistic market outlook. Additionally, heightened costs of essential input materials, such as energy and raw materials, contributed to the favorable market conditions for Palm Kernel Oil during November. Global logistical challenges, including port congestion and container shortages, posed impediments to the seamless transportation of Palm Kernel Oil from production hubs to downstream markets. These disruptions escalated transportation costs and prolonged delivery lead times, further contributing to the surge in prices. As December concludes, prices once again underwent a substantial drop, signaling subdued market demand. This diminished purchasing activity prompted market participants to proactively adopt a strategy of selling products at discounted rates, aiming to deplete stockpiles before the year-end.
Asia Pacific:
In the APAC region, the Palm Kernel Oil market witnessed significant dynamics during Q4 2023, particularly in Malaysia, a major exporter and producer. Initially in October, Palm Kernel Oil prices declined, accompanied by a surplus inventory accumulation. Industry forecasts indicated a rise in production compared to the preceding month's exports. Market participants, including retailers, suppliers, and traders, maintained ample Palm Kernel Oil inventory to fulfill inquiries from both regional and overseas markets. Moving forward in November 2023, Palm Kernel Oil prices markedly increased in the Malaysian market, influenced by factors such as heightened consumption in the food industry, sustained high crude oil prices due to geopolitical risks, and fluctuating pricing dynamics of other edible oils. Additionally, demand in India experienced a moderate rise, driven by increased demand in both domestic and regional markets, especially in the biodiesel industry. Conversely, as December unfolded, Palm Kernel Oil values, while stable, decreased in the Malaysian market. This decline was attributed to slowing exports, primarily due to reduced offtakes from key importing nations, notably India, exerting downward pressure on prices. The global demand for vegetable oils typically experiences a dip in certain consuming countries, particularly within the APAC region.
Europe:
With respect to the entire Q4 2023, Palm Kernel Oil (PKO) prices in the European market exhibited a correlation with global trends, particularly in North America. In the initial phase of October 2023, PKO prices witnessed a significant downturn, perplexing stakeholders in dependent industries. The primary catalyst for this decline was the ample supply of Palm Kernel Oil in the domestic market. Furthermore, sectors such as food and personal care, key consumers of PKO, increasingly adopted just-in-time purchasing strategies, contributing to an overall depreciation in prices. Transitioning into November, there was a subsequent upswing in PKO inquiries, driven by a moderate improvement in consumer sentiments within the domestic market. This surge was attributed to heightened demand during the holiday season, prompting food manufacturers to pre-stock in anticipation of festive demand. Concurrently, businesses displayed a moderate focus on prioritizing inventory restocking activities, bolstering market resilience. Downstream panel factories aligned their procurement strategies with incoming inquiries, fostering heightened bidding and offers among enterprises, thereby exerting an influence on market dynamics. However, as December 2023 unfolded, a conspicuous downturn in prices captured the attention of industry players and analysts, signifying a weakened trend that deviated from earlier projections. This shift in pricing dynamics carries implications for both market experts and traders who strategically amassed stocks in anticipation of an envisaged surge in demand from their respective end-user sectors. Concerning the supply side, Palm Kernel Oil remained readily available, with downstream product procurement primarily contingent on incoming inquiries from the regional market. In the short term, trade activity encountered additional setbacks due to lackluster demand within the regional market.
For the Quarter Ending September 2023
North America
In the North American region, Palm Kernel Oil (PKO) prices displayed a volatile market trend. Initially, at the beginning of the third quarter of 2023, prices rose despite moderate import activities and limited supplies from major exporters such as Malaysia, a significant player in Palm Kernel Oil production. This disruption influenced the overall market trend until April 2023. As the third quarter progressed, prices globally witnessed a significant decline due to sluggish regional trade activities and increased inventories in warehouses. Within the domestic market, demand continuously decreased. However, despite the Midwest's heatwave and drought potentially affecting Mississippi River levels crucial for US Palm Kernal Oil exports, the USDA maintained its import projection of about 25 million bushels. Similarly, exports remained unchanged for the month. Additionally, the FAO Vegetable Oil Price Index averaged 120.9 points in September, marking a 5.0-point (3.9 percent) decrease from August. This decline was driven by lower world prices across palm, soy, and rapeseed oils. International palm oil prices continued to decrease, primarily due to heightened production in major Southeast Asian countries and weakened consumption.
Asia Pacific
In the APAC region, Palm Kernel Oil (PKO) prices initially rose optimistically in July but experienced an overall declining trend. The surge in prices during the first half of Q3 was attributed to the global economic recovery and increased demand for palm kernel oil in the food, cosmetics, and biofuel industries, leading to a continuous rise in demand for the product for two consecutive months. Malaysia's ongoing production facilities ensured a steady supply of palm kernel oil, resulting in relatively stable higher-end prices. However, adverse weather conditions in Malaysia led to a decrease in the yield of Palm Kernel from the fruit kernel. Additionally, the strengthening of the Malaysian ringgit against the US dollar contributed to increased export prices, making goods more expensive. The manufacturing PMI for Malaysia showed a marginal increase in July 2023, climbing from its five-month low of 47.7 to 47.8. Favorable weather conditions and the expansion of palm oil plantations contributed to an increase in the supply of palm kernel oil in Malaysia in recent months, leading to a decline in prices in August 2023. Despite ongoing investments and government spending, challenges emerged due to the global economic slowdown, affecting Malaysia's economy. As of September 2023, trading remained subdued, influenced by weakened consumer sentiments. Furthermore, the depreciation of the Malaysian ringgit against the US dollar for the second consecutive month in September 2023 enhanced the competitiveness of Malaysian exports, including Palm Kernel Oil, in the global market. The Malaysia Manufacturing PMI declined from 47.8 in August 2023 to 46.8 in September 2023, marking the lowest reading since January. This marked the 13th consecutive month of decline in the manufacturing sector, with new export orders decreasing at the third-strongest pace in history. Output and new orders both slowed down, and employment fell for the fifth consecutive month. Additionally, consumer spending experienced its most significant slowdown.
Europe
Palm Kernel Oil (PKO) prices in the European market during Q3 2023 mirrored those in the Asia Pacific region. July saw the palm kernel oil (PKO) market remaining optimistic. One of the factors impacting Palm Kernel oil prices was the consistent rise in demand combined with low stocks. Furthermore, the market remained elevated due to increased production of raw materials like palm fruit kernel required for palm kernel oil, observed in recent months. Unfavorable weather conditions in Indonesia and Malaysia, the world's major palm kernel oil producers and exporters to the Netherlands, played a role. Droughts and floods in these countries damaged the crops used for palm kernel oil production, leading to reduced supply in the European market. The surge in demand for palm kernel oil in various sectors such as food, cosmetics, and biofuels helped sustain the upward price trend in July 2023, as palm kernel oil is a key ingredient in these products. In July, producer confidence declined, falling below the long-term average. However, increased inquiries for Palm Kernel Oil from downstream industries and neighboring nations, including food, cosmetics, and biodiesel sectors, balanced the supply-demand equation for merchants, helping them maintain their profit margins. As August progressed and into September, prices significantly dropped, reflecting weakened Palm Kernel oil prices, a pessimistic market outlook, and concerns about environmental issues in major exporting nations like Indonesia and Malaysia, the world's top producers. These factors contributed to a substantial decrease in the prices of specific vegetable oils, including palm kernel oil. Furthermore, throughout September 2023, the consumption of palm kernel oil in the regional market remained impacted, leading to reduced usage in cosmetics and personal care sectors.
For the Quarter Ending June 2023
North America
Throughout the North American region, the prices of Palm Kernal Oil (PKO) witnessed a mixed market trajectory as the prices continued to rise at the beginning of the second quarter. The importing activity was moderate, while the supplies from exporting nations, primarily Malaysia, one of the largest exporters of Palm Kernal Oil, were weak, which disturbed the overall market trend until April 2023. Moreover, moving towards the middle of the q2, the prices fell considerably across the globe with weak regional trade activity and higher stocks at the warehouses. In addition, numerous economists and business professionals reported that the US inflation rate was declining. Despite falling energy prices, there was still significant underlying inflation that exceeded the Federal Reserve's target rate. Due to their high inventory levels, domestic producers were able to meet local demand despite the challenges. However, the food inflation rate in the US increased to 10.1% in May 2023 from 8.6% in April. Following the declining trend when Q2 concludes, the prices of Palm Kernal Oil stabilized across the United States with a moderate surge in demand from the domestic market balanced by the overall supplies presented by the merchants.
Asia Pacific
Across the APAC region, Palm Kernal Oil (PKO) prices showcased a varied price trajectory in Malaysia, one of the significant exporters of PKO. During the first half of Q2 2023, there were erratic trends in the price of palm kernel oil in Asia. Prices mostly changed near the top of the curve. During the quarter shift, some reverse fluctuations were seen, but those were primarily due to increased consumption during the holy month of Ramadan, which led to increased demand and constrained supply. Moving forward, prices of PKO steadily dropped in the region around the middle of Q2, which was attributed to high outputs from Malaysia and other major producers of palm oil, as well as weak demand for the product from suppliers. Also, in May 2023, amid weaker demand, the Malaysia Manufacturing PMI fell to 47.8 from 48.8 in April, marking the 9th consecutive month of decline and the biggest drop since January 2023. For the ninth consecutive month, new orders decreased; the most recent decline was the steepest in three months due to reports of demand restraint on both the domestic and global markets. For the fifth month in a row, suppliers' delivery times were shortened, and purchasing activity fell to its lowest level in nearly two years. While as Q2 ends, The National Palm Kernel Oil Board reports that palm kernel oil inventories increased at a slower-than-anticipated rate as production fell and exports rose. Additionally, the Manufacturing Purchasing Managers (PMI) reported a YoY of 47.7 in June, which was slightly less than the YoY of 47.8 in May. The domestic retailers had an adequate supply of inventory to meet the region's overall demand.
Europe
Palm Kernal Oil (PKO) prices in the European market during Q2 2023 mirrored those in Asia Pacific. Prices for palm kernel oil increased across the board at the beginning of Q2. Prior to Ramadan, the main cause of the supply disruption came from exporting countries, particularly Malaysia, which was one of the major exporters of PKO to the Netherlands. This had an effect on the availability of all cooking oils in the nation, including palm kernel oil. The weaker market fundamentals, on the other hand, caused prices to decline significantly after April and end Q2 on a negative note with frequent fluctuations. Market demand declined for this month as a result of consumers' cautious wait-and-see attitude and the high-cost inflation brought on by the conflict between Russia and Ukraine. Additionally, as June drew near, prices stayed steady, maintaining a balance between the region's overall supply and demand dynamics. Due to higher stockpiles among the merchants successfully balancing the overall demand, traders did not place many quotations throughout June.
