Palm Oil Demand Weakens, Soy Oil Gains Edge Amidst Global Trade Challenges

Palm Oil (CPO)

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Palm oil FOB Malaysia as on 6th February stood at 814.25 $/MT higher compared to Soy oil Argentina Upriver FOB of 808.25 $/MT and Sun oil Russia FOB Black Sea of 786.50 $/MT. The palm oil is currently trading at a premium compared to both Sun oil and Soy oil.

In the foreseeable future, palm oil export demand is forecasted to weaken as its price advantage over rival oils diminishes, putting pressure on both international palm oil prices and BMD Palm oil futures. With key buyers such as India and China already having excess palm oil stocks, this is likely to further dampen global palm oil trade in the upcoming period. Countries heavily reliant on palm oil are expected to favor Soy oil in the short term. The premium for Soy oil has declined due to favorable soybean crop conditions in Argentina.

Although Sun oil is the most favourable option compared to other oils, conflicts in the Red Sea are projected to decrease the likelihood of countries purchasing from Black Sea nations due to the higher transportation costs via longer alternative routes. As a result, Soybean oil is anticipated to gain a competitive edge among the major edible oils.