Demand for M’sian palm oil rose to 19.85 million tons this year

KUALA LUMPUR: Demand for Malaysian palm oil is expected to increase to 19.85 million tons this year from 19.01 million tons in 2022, with exports expected to rise to 16.44 million tons from 15.73 million tons previously.

The remaining demand is expected to come from domestic sources (2.98 million tons) and use for biodiesel production (440,000 tons), said Sudhakar Desai, president of the Indian Vegetable Oil Producers’ Association.

Stronger export demand, mainly from India, and a shift in palm oil demand away from Indonesia due to the country’s export restrictions will help boost demand and reduce some stocks from Malaysia.

At the end of 2023, Malaysia’s stockpile is expected to be 4.33 million tons, up from last year’s 4.22 million tons, while total production this year is expected to increase moderately by 2.6% to 18.95 million tons.

“It’s not a big growth. Production in Malaysia is stagnant,” he said during UOB Kay Hian’s palm oil webinar today.

Combined Malaysian-Indonesian production is expected to reach 68.72 million tons in 2023, with exports of 44.63 million tons.

Indonesia will supply 57.09 million tons of palm oil to total production.

Sudhakar said India, the second largest consumer of palm oil, is expected to import 14.37 million tons of vegetable oil in 2022/2023, including 9.3 million tons of palm oil, 3.01 million tons of soybean oil and 2.01 million tons of sunflower oil.

“Like other countries, India has to buy stocks when prices fall sharply. It definitely looks to me like demand for vegetable oils has returned,” he said, adding that palm oil prices have fallen from their peak in April 2022 to the current level of over RM4,200 per tonne.

Sudhakar said the price of soybean oil fell 37% and the price of sunflower oil shrank 43%.

Globally, palm oil demand is expected to reach 79.22 million tons in 2022/2023, up 10% from 2021/2022. In contrast, global demand for soybeans is down 0.3% to 60.19 million tons.

It is estimated that world palm oil production will increase by 4.81% to 78.12 million tons and soybean production by 2.82% to 60.61 million tons. – Bernama