Bursa Malaysia-listed third-month crude palm oil futures contracts reached an end-of-session price of MYR4,486 per tonne, their highest close since the start of July 2022. Up to October 23, palm oil prices have gained 22.6% in 2024 to date, while the October 23 close itself represented a 19.5% gain compared to the price level twelve months earlier.

In the month of October to date, palm oil prices have risen 12.0%, having earlier closed the October 01 trading session at a price level of MYR4,006 per tonne. BMI a Fitch Solutions agency said it has identified several factors behind the recent bullish price development in the palm oil market, which will be assessed in this article in tandem with an evaluation of the risks posed to the 2024 and 2025 palm oil price forecasts. In brief, the principal drivers of palm oil price strength in October have been export supplies concerns, price strength in the wider edible oils complex, exchange rate developments, and increased risk premia in fuel markets.

As of October 23, the agency is of the view that each of these factors is transient in nature and therefore do not pose an upside risk to palm oil price forecast for 2025, but that each could act to maintain an elevated price level in the short term, thus posing an upside risk to price forecast for 2024.

BMI forecasts an average palm oil price of MYR3,850 per tonne in 2024, compared to an average price up to and including October 2023 of MYR3,966 per tonne (or, MYR3,937 per tonne prior to the start of October), and an average palm oil price of MYR3,650 per tonne in 2025.