According to information from Bloomberg, palm oil prices have dropped due to concerns about low exports from Malaysia and strong competition from its main alternative - soybean oil.
Intertek Testing Services data shows that Malaysia's export volumes for the first 20 days of December decreased by 8.3% compared to the previous month. Export to India, the main consumer, has decreased by almost 22%. During the winter period, demand for oil usually decreases due to low temperatures, at which it solidifies. However, palm oil prices are still higher than soybean oil. The discount on soybean oil compared to palm oil is about $112/ton compared to last year's average premium of $79.
Analyst Fastmarkets Palm Oil Analytics in Singapore, Satya Varka, says that weak exports from Malaysia and the deteriorating competitiveness of palm oil are undermining buyer sentiment. Some traders are also taking profit and rebalancing their positions ahead of Christmas and the holidays.
On the Bursa Malaysia Derivatives exchange, the price of palm oil for March delivery fell by 0.6% to 4514 ringgit per ton, which is only +24% since the beginning of the year. The price of soybean oil in March in Chicago fell by 1.1% to 40.23 cents/pound, but rose by 2% since the beginning of the week.