Global palm oil prices have fallen throughout June in line with a lack of purchasing amid high volatility within the palm oil market. The Mintec Benchmark Prices for EU palm oil (origin: Malaysia and Indonesia) fell by 8% from 1st June to EUR 808/MT on 25th June.
India’s vegetable oil traders have held off purchases so far this month, particularly for palm oil, following severe volatility due to speculation surrounding taxation and biodiesel mandates.
Global prices initially rose at the beginning of the month due to weaker supply from Malaysia and a recovery in demand from India, in line with a steady recovery from a second outbreak of COVID-19 in the country. However, a ruling by the US Supreme Court has made it easier for small oil refineries to gain exemption from laws that require the blending of higher levels of ethanol and other biofuels into existing products. Consequently, this will weigh on biofuel demand and producers’ profits, after a bullish run in the sector over the past year. Given that palm and soyabean oil are primary feedstocks for biofuel, both markets have experienced weaker prices so far in June.
Despite this temporary weakness in prices, the tight supply issues from the past year are still present, and the overall demand remains firm, meaning the market is unlikely to completely flip its upward trend unless strong production figures from Indonesia and Malaysia are reported in August/September 2021.