Growth in global palm oil exports is forecast to slow to 2.2 percent in marketing year (MY) 2019/20 due to limited available supplies from Malaysia and Indonesia. In Indonesia, the adoption of a nationwide B30 biodiesel blending mandate last month will boost domestic demand significantly, reducing exportable supplies.
Exports will also be limited by slowing production as Indonesia production is forecast to grow just 2.4 percent in MY 2019/20, the second-lowest growth rate in 20 years. Exportable supplies in Malaysia are also reduced this month due to lower production, which is forecast down 4.8 percent.
Despite slower supply growth, demand for palm oil remains high on steady population and income growth. In MY 2018/19, global consumption of palm oil grew at more than double the rate of production.
In MY 2019/20, this trend will continue with global consumption exceeding production by 1.8 million tons, an amount greater than total U.S. consumption in MY 2018/19. To meet demand, stocks will be drawn down, resulting in the lowest stocks since 2009/10 and the lowest ending stocks-to-use ratio in over 25 years.