KUALA LUMPUR: Demand for Malaysia’s palm oil is forecast to increase to 19.85 million tonnes this year from 19.01 million tonnes in 2022 with exports set to grow to 16.44 million tonnes from 15.73 million tonnes previously.

The remaining demand is expected to come from domestic sources (2.98 million tonnes) and usage for biodiesel production (440,000 tonnes), said Indian Vegetable Oil Producers’ Association president Sudhakar Desai.

Stronger export demand, mostly from India, and a shift in palm oil demand away from Indonesia due to the country’s export restrictions will help raise demand and clear some stocks from Malaysia.

Malaysia’s end-2023 stock is likely to be at 4.33 million tonnes, higher than last year’s 4.22 million tonnes, while overall production is expected to grow moderately by 2.6% to 18.95 million tonnes this year.

‘’It’s not a big growth. Production has been stagnant for Malaysia,’’ he said during UOB Kay Hian’s palm oil webinar today.

Combined Malaysia-Indonesia production is expected to reach 68.72 million tonnes in 2023, with exports at 44.63 million tonnes.

Indonesia will supply 57.09 million tonnes of palm oil to the total production figures.

Sudhakar said India, the second largest palm oil consumer, is projected to import 14.37 million tonnes of vegetable oils in 2022/2023, of which 9.3 million tonnes will be palm oil, 3.01 million tonnes soybean oil, and 2.01 million tonnes sunflower oil.

“Like other countries, India has a need to pick up stocks when there is a steep drop in prices. To me, it definitely looks like demand for vegetable oils has returned,’’ he said, adding that that palm oil prices have dropped from their April 2022 peak to hover at the current level of over RM4,200 per tonne.

Sudhakar said the soybean oil price has dropped 37% and the sunflower oil price has shrunk by 43%.

On a global scale, palm oil demand is likely to reach 79.22 million tonnes in 2022/2023, a 10% uptrend from 2021/2022. In contrast, global demand for soybean is lower by 0.3% to 60.19 million tonnes.

Global palm oil production is estimated to grow 4.81% to 78.12 million tonnes, and soybean to increase by 2.82% to 60.61 million tonnes. – Bernama