The global market for palm oil is expected to further decline in prices due to increased production and reduced demand.

In the middle of the second quarter of 2024, palm oil prices in exporting countries are likely to remain low, with a possibility of further decrease due to reduced export volumes. In early April, several factors affected the market, primarily increased palm kernel oil (PKO) production and decreased global demand.

One of the key factors influencing the current dynamics is the increase in palm oil production in Malaysia and other major producers due to favorable growing conditions and unexpectedly abundant yields, leading to increased availability.

Typically, higher production levels indicate a healthy market, but this year it coincided with a period of reduced demand, exacerbating downward pressure on prices.

However, the decline in demand for palm oil, especially noticeable since April, had an even greater impact on the market. Industries using palm kernel oil, such as food production, cosmetics, and other oil-related sectors, are likely reducing their consumption. This reduction can be attributed to several factors, including economic slowdown in key markets and procurement strategies.

Some buyers may have anticipated price decreases and therefore postponed their purchases in hopes of better deals, further supporting the ongoing trend of decreasing export prices for palm kernel oil from Malaysia.

Additionally, the exchange rate played a significant role in shaping the current market dynamics. Strengthening of the US dollar against the Malaysian ringgit makes palm oil more affordable for international buyers, theoretically leading to increased demand.

However, this currency advantage has not translated into increased buying activity, indicating weak fundamental demand indicators currently.

Market analysts are closely monitoring the situation, noting that the relationship between production levels and global demand will be crucial in determining future trends.

If demand for palm kernel oil and related oils does not increase or if production remains high, extended periods of low prices may occur in the market. Conversely, any signs of increased consumption of palm kernel oil or strategic market interventions may help stabilize prices.

In conclusion, according to analysts' forecasts, the Malaysian palm oil futures market is experiencing significant volatility due to high production levels, weak demand, and currency fluctuations.

Stakeholders are advised to closely monitor developments, as the outcomes will have far-reaching implications for the agricultural market, including palm kernel oil and related industries. The next few weeks will be crucial in assessing the possibility of market recovery or the inevitable continuation of the decline.