Palm Oil Hits Over Two-Week High

Malaysian palm oil futures extended their recent gains, hovering above MYR 4,650 and climbing to their highest level in more than two weeks. Sentiment was supported by strength in rival edible oils on the Dalian and Chicago exchanges, alongside a weaker ringgit that improved the commodity's export competitiveness. Strong export demand also underpinned prices, with cargo surveyor Intertek Testing Services noting that Malaysian palm oil product shipments rose 19.1% during June 1-20 from the same period in May. Supply concerns added further support as the lingering effects of El Niño continued to fuel forecasts of lower production. Meanwhile, imports by top buyer India are expected to exceed 600,000 tonnes in June after rising to 549,356 tonnes in May, signaling firm demand. However, gains were capped by a sharp drop in crude oil prices after reports that the U.S. and Iran made progress in talks toward a broader agreement within 60 days, including efforts to end hostilities in Lebanon.

Malaysian palm oil futures hovered above MYR 4,600 per tonne, continuing their bullish momentum and notching a two-week high, lifted by a weaker ringgit and stronger exports. Cargo surveyors noted that palm oil shipments during June 1–15 rose between 9.6% and 23.8% from the same period in May. Meanwhile, imports by top buyer India are expected to exceed 600,000 tonnes in June after edging up to 549,356 tonnes in May. Expectations of lower production due to the lingering effects of El Niño also continued to support prices. In Indonesia, the world's largest palm oil producer, the B50 biodiesel mandate is set to take effect on July 1 after fuel tests delivered positive results, boosting the domestic demand outlook. Contracts are also on track to end the week over 3% higher, with sentiment further supported by the Malaysian Palm Oil Council's forecast that prices will hold between MYR 4,400 and MYR 4,650 in July. However, holidays in the Dalian and Chicago markets limited further upside.

Malaysian palm oil futures fell below MYR 4,500 per tonne, reversing the previous strong rally, as trading resumed after a holiday. Sentiment was pressured by weaker edible oil prices on the Dalian and Chicago markets. A sharp decline in crude oil prices added to the downside after the U.S. and Iran signed an interim agreement aimed at ending hostilities and reopening the Strait of Hormuz, reducing support from the biofuel sector. Meanwhile, Malaysia lowered its July crude palm oil reference price, keeping the export duty unchanged at 10%. Still, losses were limited by a weaker ringgit and expectations of lower production due to the lingering effects of El Niño. Demand prospects also remained supportive after cargo surveyors reported that palm oil exports during June 1–15 rose between 9.6% and 23.8% from the same period in May. In top buyer India, imports are expected to exceed 600,000 tonnes in June after edging up to 549,356 tonnes in May, according to local traders.