Palm Oil Rebounds

Malaysian palm oil prices strengthened, hovering above MYR 4,550 per tonne after recent declines, supported by a weaker ringgit and firmer crude oil prices. Stronger demand also lent support, with cargo surveyors estimating June 1–25 palm oil exports rose between 10.6% and 11.1% from the same period in May. In Indonesia, the top producer and exporter, President Prabowo is set to launch the B50 biodiesel mandate on July 1 to advance energy independence. At the same time, demand prospects in China, another key consumer, improved after manufacturing and services returned to modest growth in June. However, softer edible oil prices on the Dalian and Chicago exchanges limited strength. Sentiment was further weighed by Indonesia’s move to cut its July crude palm oil reference price to USD 1,000.90 per tonne from USD 1,029.51 in June. Investors also remained cautious ahead of monthly industry supply and demand data due later this month.

Malaysian palm oil traded below MYR 4,600 per tonne, extending recent losses as a firmer ringgit and weakness in rival edible oils on the Dalian and Chicago exchanges weighed on sentiment. Crude oil prices also fell amid the prospects of possible U.S.-Iran talks, reducing support for edible oil markets. Still, palm oil is on track to post a modest monthly gain, up about 0.3% so far, after declining in the previous two months, supported by signs of stronger demand, weather-related supply concerns, and higher biodiesel mandates in major producing countries. In key consumer China, business activity improved in June as both manufacturing and services expanded modestly, offering some support to the demand outlook. Even so, prices remain set for a sharp quarterly loss, reversing a near 20% surge in the first quarter. Traders now await full-June Malaysian export estimates from cargo surveyors after shipments during the first 25 days of the month rose 10.6%–11.1% from the same period in May.

Malaysian palm oil futures hovered above MYR 4,550 per tonne, extending modest gains as stronger edible oil prices on Dalian and Chicago exchanges supported sentiment. Higher crude oil prices also improved palm’s appeal as a biodiesel feedstock. Firmer exports also added support, with cargo surveyors noting shipments rose between 10.6%–11.1% in the first 25 days of June. Supply fundamentals stayed constructive as weather risks clouded production prospects. Meantime, top producer Indonesia will roll out its B50 biodiesel mandate from July 1, with a three-month transition for retailers to clear stocks, reinforcing expectations of stronger domestic consumption. In India, imports are projected to exceed 600,000 tonnes in June, up from 549,356 tonnes in May, underscoring robust demand from the world’s largest buyer. Gains, however, were capped by a firmer ringgit and cautious positioning ahead of China’s PMI data later this week, which may offer fresh clues on demand from the key consumer.