Palm Oil Extends Strength

Malaysian palm oil futures held above MYR 4,750 per tonne, hovering at a three-week peak amid firmer edible oils on China’s Dalian exchange and robust export demand. Cargo surveyors reported a 43.2%–58.3% month-on-month surge in Malaysian palm oil shipments during the first half of October, while festival-driven buying from India, the world’s largest palm oil importer, further supported sentiment. Indonesia also raised its October crude palm oil reference price by 3.44% to USD 1,042.15 per tonne. Supply concerns added support, as Indonesia’s B50 biodiesel mandate and severe El Niño conditions threatened to disrupt supply and logistics. In China, another major consumer, stronger-than-expected Q3 growth and resilient September activity bolstered demand prospects. Meanwhile, oil prices eased but remained elevated amid Middle East tensions, offering some support through the biodiesel channel. However, gains were tempered by record-high inventories of 3.51 million tonnes in September.

Malaysian palm oil futures surged more than 3% to above MYR 4,750 per tonne, erasing prior losses and hitting a three-week high. Firmer edible oils on China’s Dalian exchange and Chicago markets boosted sentiment, while supply concerns in top producer Indonesia also added support. The Indonesian Palm Oil Association projected output to fall to 51.7 million tonnes in 2027 from 53.7 million this year, with exports seen dropping nearly 15% yoy amid rising domestic biodiesel and food consumption. Meanwhile, cargo surveyors reported Malaysian shipments jumping 33.5%–37.7% in October 1–10 from the same period in September, signaling stronger near-term demand. Robust festival buying from India, the world's largest palm oil importer, further buoyed prices. However, record-high Malaysian inventories and growing caution ahead of Q3 GDP data next week in China, a major palm oil consumer, tempered gains. For the week, futures were on track for a second straight advance, up about 3.9% so far.

Malaysian palm oil futures retreated after recent gains, slipping below MYR 4,700 per tonne amid weaker edible oils on China’s Dalian exchange and lower crude oil prices, which reduced palm oil’s appeal as a biodiesel feedstock. Sentiment was also weighed down by renewed concerns over record-high inventories, which climbed to 3.51 million tonnes in September amid peak seasonal production, according to the Malaysian Palm Oil Board (MPOB). Meanwhile, China’s strong September trade surplus and import growth have been supported largely by robust industrial activity and global technology demand, rather than a broad-based recovery in domestic consumption, limiting optimism over demand prospects. However, losses were partly cushioned by signs of stronger export demand, with cargo surveyors estimating palm oil shipments rose 33.5%–37.7% in the first 10 days of October from the same period in September. Expectations of sustained festive buying from top importer India also provided support.