Global prices of palm oil are expected to drop by the end of the current season which ends next September owing to a glut of supply on the market.
Thomas Mielke, CEO of Oil World, a vegetable oil analysis firm, told Reuters that the price per ton could fall to between $40 and $50 in a few months, from the current $630.
“We see for April-September a global output surplus and a building of stocks in the world, particularly in Malaysia and Indonesia,” he said.
For the record, after a previous drop due to the El Niño dry spell in 2015, the oilseed’s global output is gradually recovering, reaching 70.5 million tons in 2018, up 3.8% compared with 2017 (67.9 million tons).
According to the CEO, global prices could increase in 2019-20, assuming a deficit in the global market.
Furthermore, Mr. Mielke indicated that the global output is expected to grow slower in coming years, reaching 86.3 million tons by 2025.
Let’s recall that palm oil is the most profitable oilseed with a yield over eight times higher than that of other crops such as soybean, coconut or rapeseed oil. The main importers are India, the European Union, China, and Pakistan.