The palm oil market in 2017
Having closed 2016 strongly, with the Crude Palm Oil (CPO) price (c.i.f. Rotterdam) at US$795 per tonne, prices continued at these levels until the middle of February. Despite very low levels of CPO and vegetable oil stocks worldwide, the anticipated rebound of production following the El Niño of 2015-16 led to an erosion of the price towards US$650 per tonne. The price subsequently stayed at this level, or a little higher, other than for a period during May when it temporarily rallied to around US$750 per tonne. Overall, the average price during the first half of 2017 was US$735 per tonne, appreciably higher than the US$668 recorded for the first half of 2016 and above the average price for the calendar year 2016 of US$700 per tonne. Since June 2017, the CPO price has been in the range US$650-US$750 per tonne.
Most unusually, in January 2017 the price for palm kernels exceeded that for crude palm oil. At the beginning of 2017, stocks of palm kernel oil had fallen to very low levels, which was compounded by a shortage of its main competitor, coconut oil. This pushed up the price of palm kernel oil and hence the price for palm kernels. These conditions lasted through much of February, but as the price of coconut oil reasserted its usual premium to palm kernel oil, the price of palm kernels fell.