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Malaysian palm oil to trade between 3,700-4,500 rgt/T until mid-2024- analyst Mistry

Malaysian palm oil is expected to trade between 3,700 to 4,500 ringgit ($790-960) per metric ton from now until mid-2024, as an El Niño weather pattern threatens supplies amid rising demand from the food and biodiesel sectors, industry analyst Dorab Mistry said.

Benchmark palm oil futures on the Bursa Malaysia Derivatives Exchange closed at 3,766 ringgit a metric ton on Friday.

“The trajectory of palm prices will depend on the severity or otherwise of the upcoming EL Niño,” Mistry, the director of Indian consumer goods company Godrej International, said at an industry conference Globoil in Mumbai on Friday.

Hot, dry weather as a result of the El Niño phenomenon usually reduces palm oil yields in the main producers, Indonesia and Malaysia.

The top palm oil producer, Indonesia, is expecting a reduction in production in 2024 because of El Niño, while the second biggest producer Malaysia is expecting a marginal rise in output due to better availability of labour.

Global vegetable oil demand from the food and energy sectors is expected to rise by 7.5 million metric tons in 2023/24, but supplies are projected to increase by 5 million metric tons, he said.

Demand for vegetable oils from the energy sector is likely to grow by 4.5 million metric tons in 2023/24, mainly due to rising consumption in Indonesia and the United States, he said.

Indonesia raised its mandatory palm oil blend in biodiesel in February from 30% to 35%, under a program known as B35.

However, the mandatory B35 blend is only now being fully implemented as some regions needed to upgrade infrastructure to meet the new requirement.

US soyoil futures will continue to benefit from brisk biodiesel demand and trade around current levels until crushing picks up in South America, he said.
Source: Reuters (Reporting by Rajendra Jadhav; Editing by Simon Cameron-Moore)

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