Malaysian crude palm oil futures fall

Market: Agriculture, Biofuels, Chemicals
17/01/25

Benchmark crude palm oil (CPO) futures on the Bursa Malaysia Exchange fell by 197 ringgit/t ($44/t) or 4pc on the week to 4,183 ringgit/t by the 4:30pm Singapore close.

The CPO futures declined over four straight sessions from 14 January to the lowest level in three months, likely following a reported fall in CPO exports for a second month in December, according to Malaysian palm oil board (Mpob) data.

The recent export suspension for palm oil mill effluent (Pome) oil and used cooking oil (UCO) by Indonesia has also resulted in uncertainty for Indonesian CPO supply, as the country's trade ministry alleged CPO was blended into the waste oil pool and exported out under Pome oil or UCO HS codes. The upcoming mandate for a higher 40pc palm oil-based biodiesel blend is also expected to come into effect by end-February, further limiting CPO availability.

Malaysia maintained its CPO export levy rate at 10pc for February 2025, but lowered the reference price to 4,817.70 ringgit/t from 5,001.72 ringgit/t a month, earlier in line with a 7pc year-to-date fall in the CPO futures. Market participants suggested Indonesia may raise its palm oil export levy to 10pc, matching the Malaysian levy rate. The government is expected to announce further measures to restrict waste oil exports and boost funding for its B40 mandate, possibly early next week. With CPO futures returning to a discount to rival soybean oil futures in January, as well as lower Indonesian CPO availability, CPO could see price support from buyers switching and lower overall supply in the market.

By Malcolm Goh

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