Demand for palm oil from India and China is projected to rise in the coming months, spurred by recent price corrections that present attractive buying opportunities, according to industry expert Julian McGill. Prices for palm oil in Malaysia surged nearly 20% last year but have since dropped about 12% this year, leading to a loss of competitiveness against rival oils like soyoil.
Speaking at a palm oil forum in Jakarta, McGill, the managing director of Glenauk Economics, expressed confidence in a short-term recovery of these markets. He highlighted that Indian buyers, who have reduced their palm oil imports since December, are now returning with significant purchases slated for June to August, thanks to lower prices for palmolein compared to other oils.
China, too, is showing increased activity in palm oil imports, with physical importers making substantial purchases for the same delivery timeframe. McGill noted that Chinese buyers might stock up significantly, as their current stock levels are relatively low.
This combined demand from both India and China is expected to maintain palm oil prices within the range of 3,900 to 4,200 ringgit per metric ton over the next six months. As of Tuesday, the main palm oil contract on the Malaysian bourse closed at 3,864 ringgit per ton.
While the current demand appears promising, McGill cautioned that its sustainability will heavily rely on the price competitiveness of palm oil against other oils. He anticipates peak export volumes to be observed around August, indicating a potential recovery in the market if conditions remain favorable.