Malaysia's high palm oil stocks weigh on the entire oilseed market
Despite a sharp reduction in monthly palm oil ending stocks during the period of low rainfall in tropical Malaysia, stocks are still above the level of current production.
The recent rebound in production since the beginning of 2013 is heading towards the seasonal peak in Sept/Oct 2013. The increase to date has been somewhat more restrained compared to the previous year. However, the rest of the year will depend largely on the weather. In any case, a significant proportion of the trees are in their highest-yielding phase of 30 years,
The demand for palm oil has become more modest now that the prices of other vegetable oils and fats have also fallen noticeably and the competitive advantage of palm oil is no longer as great.
The demand for palm oil is also affected by the reduction in demand for biodiesel, which is particularly noticeable in Europe on the basis of rapeseed oil and in Argentina and Brazil on the basis of soybean oil. Peak demand was regularly covered by palm oil.
There are signs that ending stocks will increase again in the autumn, with the result that the current low price level below the $700 per tonne mark will continue.
Palm oil's high market share of around 30%, combined with its low price, makes this vegetable oil the market leader.
There is direct competition for European rapeseed in the use of biodiesel, whereby palm oil is cheaper in summer than in winter because it has a greater tendency to flocculate.
Vegetable oils will come under even greater pressure if the EU's political intentions to reduce the blending requirement by 2% in order to save public money are realized.
The predicted period of abundant supply has already occurred
