Palm Oil Exports Constrained By Lower Exportable Supplies
11.02.2020 21:00 "Agro Perspectiva" (Kyiv) —
According to the report of the USDA Oilseeds: World Markets and Trade (February 2020), Growth in global palm oil exports is forecast to slow to 2.2 percent in marketing year (MY) 2019/20 due to limited available supplies from Malaysia and Indonesia. In Indonesia, the adoption of a nationwide B30 biodiesel blending mandate last month will boost domestic demand signficantly, reducing exportable supplies. Exports will also be limited by slowing production as Indonesia production is forecast to grow just 2.4 percent in MY 2019/20, the second-lowest growth rate in 20 years. Exportable supplies in Malaysia are also reduced this month due to lower production, which is forecast down 4.8 percent.
Despite slower supply growth, demand for palm oil remains high on steady population and income growth. In MY 2018/19, global consumption of palm oil grew at more than double the rate of production. In MY 2019/20, this trend will continue with global consumption exceeding production by 1.8 million tons, an amount greater than total U.S. consumption in MY 2018/19. To meet demand, stocks will be drawn down, resulting in the lowest stocks since 2009/10 and the lowest ending stocks-touse ratio in over 25 years.
PROJECTION FOR 2019/20
Global 2019/20 oilseed production is forecast at 577 million tons, a 2-million-ton increase
from January primarily driven by larger crops of soybean and sunflowerseed. Oilseed crush is
raised 2 million tons to 498 million on higher soybean crush in China. Oilseed ending stocks
are revised up 2 million tons mainly on higher Brazil production and China stock rebuilding.
Protein meal production is up 1 million tons from last month to 340 million tons primarily on
higher soybean meal production in China, Ukraine, and Bangladesh. Protein meal ending
stocks are slightly down from December. Vegetable oil production is down 1 million tons and
oil ending stocks are down 2 million tons on declines in palm oil production. The projected
U.S. season-average farm price for soybeans is lowered by $0.25 to $8.75 per bushel.