Palm Oil Poised for Modest Weekly Gain

Malaysian palm oil futures rose modestly to trade above MYR 4,550 per tonne after recent weakness, supported by stronger export prospects. Cargo surveyors estimated that palm oil shipments during July 1-15 increased between 4% and 12.4% from the same period in June, pointing to firmer overseas demand. Malaysia also raised its August crude palm oil reference price, keeping the export duty at 10%. Meanwhile, crude oil prices remained elevated amid supply disruptions in the Strait of Hormuz, reinforcing palm oil's appeal as a biodiesel feedstock. However, gains were capped by a stronger ringgit and weaker rival edible oils on the Dalian and Chicago exchanges. Additional pressure came from softer demand prospects in key importing markets. In India, palm oil imports fell to a 14-month low in June as a narrower discount to competing oils curbed buying interest, while China's economy expanded at its slowest pace since late 2022 in Q2, raising concerns over future demand.

Malaysian palm oil futures edged lower after recent gains, hovering below MYR 4,600 per tonne amid a firmer ringgit and weaker demand prospects from major buyer China as the economy grew at its slowest pace in 3-1/2 years. In India, the top palm oil importer, purchases fell to a 14-month low in June as demand fell and a narrowing price discount to rival oils reduced buying interest. Meanwhile, the EU confirmed imports of palm oil derivatives will be subject to its anti-deforestation rules from December 2027. Still, losses were capped by strength in rival edible oils on the Dalian and Chicago markets, along with stronger crude oil prices after U.S. President Trump reimposed a naval blockade in the Strait of Hormuz. Meanwhile, the B50 biodiesel mandate in Indonesia, the largest supplier, is expected to spur domestic palm oil consumption. Traders now await export data for the first half of July, after shipments rose 1.6%–5.1% in the July 1–10 period compared with the same period in June.

Malaysian palm oil futures climbed almost 1% to above MYR 4,550 per tonne, recovering from recent losses as a weaker ringgit and firmer edible oil markets in Dalian and Chicago markets lifted sentiment. Gains were further supported by a rally in oil prices on concerns over potential disruptions to energy flows through the Strait of Hormuz. Exports also improved, with cargo surveyors noting July 1–10 shipments rose 1.6%–5.1% from June. In top supplier Indonesia, rising biodiesel mandates to B50 are expected to boost domestic consumption. However, upside was capped by news that EU imports of palm oil derivatives will be subject to the bloc's anti-deforestation rules from Dec 2027, while June data showed Malaysian inventories grew 4.8% mom as production rose 8.1% on seasonal output. In India, imports fell to a 14-month low in June amid weak demand and narrowing discounts to rival oils. Traders stayed cautious ahead of China’s Q2 GDP prints after solid June trade data from the major buyer.