Palm prices expected to remain above 4,800 ringgit, MPOC says

KUALA LUMPUR, Dec 17 (Reuters) - Palm oil prices are expected to remain above 4,800 ringgit ($1,075.03) in December, supported by the recovery of soybean oil prices, the state agency Malaysian Palm Oil Council (MPOC) said on Tuesday. MPOC said that the price rally would depend on supply conditions in Malaysia and Indonesia, especially if severe monsoons persist throughout December, which would further disrupt production. The subdued energy prices will also be a factor in limiting the price rally, the agency said, adding that palm oil remains $400 per ton more expensive than gas oil, necessitating substantial government subsidies to make palm oil viable for biodiesel blending. "Palm oil demand in December is anticipated to remain stable as importers stockpile ahead of Indonesia's B40 biodiesel mandate implementation in January 2025 and a potential revision to Indonesia's palm oil export levy structure in the coming months," MPOC said in a statement. It added that heavy rains and flash floods in Malaysia and Indonesia's Kalimantan region in late November have disrupted harvesting and production, noting that the monsoon season is expected to continue through December. MPOC said Malaysia's palm oil production is likely to decline further, potentially ending the year with inventories of 1.8 million tonnes, 21% lower than the 2.29 million tonnes recorded in December 2023. "All of this is supportive of palm oil prices as it will limit export supplies," it said. MPOC added that the weak soybean oil prices in the U.S. are expected to reverse rapidly once the U.S. biofuel policy is clarified, which will prompt biofuel producers to resume their purchases, thus driving up soybean oil prices. The agency also said that soybean oil usage in the U.S. biofuel industry is expected to grow steadily in the coming months since China has removed the 13% tax rebate on used cooking oil exports. ($1 = 4.4650 ringgit) (Reporting by Ashley Tang; Editing by Mohammed Safi Shamsi) (([email protected];))