JAKARTA – The condition of wet weather has reduced the palm oil production of Indonesia during the period of 2022/23 to 46.5 million metric tons, which is 1% lower than the last update.
Such condition also occurred in Malaysia, where its palm oil production during the same period dropped to 18.7 million metric tons or a decrease of 1% from the previous report.
Based on data from the Malaysian Palm Oil Council (MPOC), the world’s imports of palm oil during 2022/23 are estimated at 49.5 million metric tons, which are slightly lower than last month estimation at 49.6 million metric tons, but an increase of 15.9% from that of the 2021/22 period.
“The global demand for palm oil is expected to be supported by the palm oil price that has been continually and heavily discounted compared to other rival vegetable oils, and prospects for higher import growth from the main consuming countries,” MPOC said in a report.
The low harvest and the unfavorable condition of wet weather during the second week in January had caused high risk of flooding and triggered a fear of palm oil supply shortage. In addition to that, the condition of drought and low vegetation density in Argentina that might worsen the harvest of soybean and the possible impacts of weather transition from La Nina to El Nino.
On the side of demand, the strengthening of Malaysian Ringgit and Indonesian Rupiah will cause the palm oil price slightly more expensive for global buyers. High stocks of palm oil in many countries of export destination, such as China and India, winter condition, and holidays of Chinese New Year have contributed to the limited exports during January 2023.
But MPOC projected that the demand for palm oil will increase ahead of the fasting month of Ramaddan in March 2023. Countries that observe Ramadhan and Eid al-Fitr will usually see an increase of palm oil demand during the month.
“The lower price of palm oil compared to that of other vegetable oils will keep the palm oil attractive, and make the importing countries keep their purchases,” MPOC said. (*)
Source: wartaekonomi.co.id
