Value of Malaysian palm oil hits 8 month low

The price of Malaysian palm oil has hit its lowest value in eight months, according to Nikkei Asian Review.

The falling price has been triggered by an expectation of rising palm oil production. Good weather conditions in major palm oil exporting countries mean there is a good chance the trend will continue.

Malaysian palm oil futures dropped to around 2,490 ringgit ($566, EUR 520) a ton on 20 April, a 20% drop from the recent peak in value reached late in 2016.

Droughts caused by El Nino saw palm oil production fall by 6% in 2016 when compared to 2015, which in turn pushed the price of the commodity to as high as 3,200 ringgit ($727, EUR 669) a ton. However, good weather conditions in the first quarter of this year have seen the production volume of palm oil in Malaysia increase by 24% over the first three months of 2017.

Used in a variety of products in the food, chemical and fuel industries, palm oil is predominantly produced in tropical Southeast Asia, with Malaysia and Indonesia the world’s two biggest exporters.

Along with the changing weather conditions leading to increased production, an EU resolution calling for a single certification scheme for palm oils and their gradual phasing out by 2020 has also hit the price of the commodity.