Palm oil production faster than consumption and Malaysian palm oil reach record levels

In Germany, UFOP reports that the productivity of oil palm trees seasonally decreases from October onwards. Nevertheless, January/March 2019 palm oil production was up, on average, 10 per cent from a year earlier. By contrast, exports only increased 7 per cent.

In the first three months of the ongoing year, Malaysian production of palm oil amounted to just less than 5 million tonnes. Around 4.6 million tonnes went abroad. As a result, supplies continued to rise, as they have done continually since February 2017. They reached a record of 3.05 million tonnes in February 2019.

India and China were the traditional main buyers of palm oil in the first quarter of 2019, followed by the Netherlands and Pakistan. Spain surpassed the US and Philippines. India purchased around 1.1 million tonnes, which was just less than 30 per cent more year-on-year. It was also twice the amount exported to China. Nevertheless, China ordered 571,253 tonnes, which translates to an around 50 per cent rise from the same period last year. The Netherlands remained on third place, but the volume of 230,697 tonnes was down 16 per cent year-on-year. This may be due to the fact that other EU countries increased their direct shipments. For instance, Spain received 171,161 tonnes from Malaysia. This was a more than 50 per cent increase. Italy even doubled its imports to 124,612 tonnes. Germany does not play any significant role in foreign trade with Malaysia. Deliveries reached around 3,642 tonnes in the first quarter of 2019, which was only one fourth of the previous year’s amount.

The Union zur Förderung von Oel- und Proteinpflanzen (UFOP) expects that pressure on prices of palm oil is going to increase in the wake of the growth in supplies and that, consequently, pressure to use more palm oil-based biodiesel in blends will also increase as crude oil prices are on a rising trend, driven by the US policy to isolate Iran as a supplier of crude oil. The Malaysian government has raised its blending mandate from 7 per cent in 2018 to 10 per cent in 2019.