Palm oil prices are headed for a double-digit quarterly gain, fueled by tightening supplies and robust demand for the world’s most-consumed edible oil. Tropical oil, used in items from cooking oil to ice cream and soap, has risen 13% this quarter after an abrupt drop in production in No. 2 grower Malaysia reduced inventories. That’s set benchmark prices on track for their biggest quarterly advance since the end of 2022. Prices are likely to remain resilient, given current demand levels, concerns over hot and dry crop conditions, and the positive impact of a weaker ringgit on exports.
Malaysia’s stockpiles could fall below 1.7 million tons at the end of March, an 11% drop from February, and are expected to shrink further in April.
Despite initial worries that palm’s high prices would curb demand, exports have remained firm thanks to the major Muslim festivals of Ramadan and Eid al-Fitr, which are driving up consumption of cooking oils. Malaysian shipments jumped 21% over March 1-25 from a month ago, according to cargo surveyor AmSpec Agri.
