Malaysian government expects increased palm oil prices in 2019
According to the Malaysian government, palm (4556, -2.00, -0.04%) oil prices are expected to rebound in 2019 due to increased demand and higher exports. Palm oil production will also increase, as palm fruit bunch production is expected to increase.
The budget report issued by the Malaysian government on Friday shows that the average price of palm oil in 2019 is expected to be 2,400 ringgits per ton, or approximately US$575.19. In comparison, the average Malaysian palm oil price in 2018 was RM2,300/ton.
The report stated that palm oil production in 2018 is expected to slightly decrease to 19.98 million tons, which is lower than the 19.99 million tons in 2017 because of the decline in palm fruit bunch production. Palm oil production will increase to 20.5 million tons in 2019 due to the increase in mature area.
The report added that palm oil exports in 2018 will be affected by the decline in Chinese demand as consumers switch to other edible oils. India's demand may also decrease because of high import tariffs, which will cause stocks to increase in 2018.
The report stated that palm oil inventories are expected to reach a record 2.9 million tons at the end of 2018, up from 2.7 million tons in 2017. However, palm oil stocks in 2019 are expected to fall to 2.2 million tons, as exports to major trading partners will increase.
In early 2018, India raised import tariffs on crude palm oil and refined palm oil to the highest level in a decade to protect the income of domestic farmers, which may cause the country’s palm oil imports to fall to the lowest level in six years.
India and China are the top two palm oil importers in the world. In 2017, Malaysia exported 2.83 million tons of palm oil to India and 1.88 million tons to China.