Focus on Oils [Olive Oil]
Taking a closer look at the major commodities markets can aid in crafting effective buying...
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In the commodities recap there is heavy pressure on the Malaysian stock exchange for palm oil.
- MALAYSIA: The strengthening of the ringgit against the dollar is generating pressure on the falling Malaysian stock market prices. In addition, the recent reversal of the country's export trend, caused by slower shipments to India and China, is generating concerns around weak demand. Though in decline, Malaysian production continues to exceed expectations and is expected to increase by 3.3 % this year, easing labour shortages as early as mid-2023. A similar trend is observed for inventories, which still remain very high. Furthermore, Malaysia recently warned that it might stop exporting palm oil to the EU in retaliation for the introduction of new legislation to protect forests through the strict regulation of palm oil sales. If implemented, this restriction could have significant consequences in terms of redirecting trade flows and/or generating a substitution effect with other vegetable oils.
- INDONESIA: To ensure sufficient domestic supply, the government will limit the country's exports depending on the domestic situation, including the availability and domestic prices of palm oil.
- The large discount on other vegetable oils and the high export volumes in recent months have generated a large stock build-up in several importing countries, especially in India. This is already causing the first slowdowns in international demand and will act as a cap on quotes in the coming months. However, global consumption is expected to increase significantly in 2023 and global supply is expected to fall, which will offset the slowdown in international demand and generate tensions in the short term.
To read the full February 2023 Commodities Bulletin register here: