Will Palm Oil start to climb before the end of the year?

For palm oil and other edible oils 2018 has been a year of oversupply and low demand. Consistently we have seen higher crops figures then expected and lower demand as well. The result has been Palm oil trading at a 3 year low point and other edible oils in similar positions. But a recent conference has pointed the way up. Its been predicated that 2019 will see prices start to rise and that actually now is likely the lowest point in the market cycle. Reasons given include lower crops next year and increased demand for palm oil from the likes of China as the US trade war widens. Also Thailand is exploring using surplus low grade palm oil as a fuel for power stations. This new market could see demand pick up significantly. Whilst coconut is likely to follow this upward movement there are more pressure on coconut oil anyway. Current low prices are pushing some out of the market and we will see farmers in the Philippines and Sri Lanka move away from collecting coconuts and harvest other crops whilst the prices are at these low levels.

Desiccated prices remain pretty much on the floor at the moment following edible oils. But with US and European buyers now seeing coconut as a cheap raw material once more demand is likely to pick up considerably. So whilst warehouse are going into the year end holidays full its likely this wont last too long. Its also interesting a number of buyers now taking much longer positions some until end of 2019 as they wish to secure prices before they rise.

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