Demand for palm oil is rising as the product’s discount compared to soya and sunflower oil increases amid recent price rises due to production problems in the U.S. and supply disruptions from the Black Sea region, industry officials told Reuters.
The surge is expected to bolster Malaysian palm oil futures and reduce stocks in Indonesia and Malaysia.
“Aggressive pricing is helping palm oil as buyers are switching to it instead of other counterparts,” said Chief Executive Officer of Patanjali Foods Ltd. Sanjeev Asthana.
According to market participants, crude palm oil is being offered at $910 per tonne including cost, insurance and freight (CIF) to India for September shipments, compared with $1050 and $1010 for crude soybean and sunflower oil, respectively.
“Soybean oil prices jumped for the month due to production problems in the United States and lower supplies from Argentina. Sunflower oil rose in price as Russia pulled out of the ‘grain deal’,” the report said.
However, the discount on palm oil is likely to gradually diminish as rising exports will reduce product balances in both Malaysia and Indonesia, one of the traders interviewed said.