Market update: Palm oil prices increase after production losses

By RJ Whitehead

- Last updated on GMT

© iStock
© iStock

Related tags: Palm oil, Southeast asia, Indonesia

The price of palm oil has increased by 12% since August due to a decline in production coupled with high demand. 

According to Mintec, the commodities analyst, estimates for global production between January and September 2016 showed a 7% decrease year on year to 43.3m tonnes. 

Palm

This is due to weaker than expected production from major producers Indonesia and Malaysia, with the latter’s production estimated at 10.9m tonnes—down 15% year on year. 

The fall in production has renewed concerns that tree damage in Southeast Asia, caused by droughts in 2015/16, may continue to hamper output in the 2016/17 season. 

In addition to low production, palm oil exports have picked up recently, further supporting the high prices. This increase is mainly due to growth in demand from China and India ahead of festive celebrations in these countries.

Related topics: Markets

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