Palm Oil Poised for Second Straight Weekly Drop

Malaysian palm oil futures edged lower, hovering below MYR 4,500 per tonne and extending recent losses as a stronger ringgit and weaker edible oil prices on the Dalian exchange weighed on sentiment. Meanwhile, Chicago markets are closed for a holiday. Caution also prevailed ahead of key supply-demand reports due next week. For the week, palm oil is set for a second straight decline, down about 1.5%, pressured by data showing imports by top buyer India fell to a 14-month low in June as sluggish demand and a narrowing price discount to competing vegetable oils reduced purchasing interest. Still, weakness was limited by firmer crude oil prices and improving export demand. Cargo surveyors estimated that palm oil exports during June 1-25 rose between 10.6% and 11.1% from May. Meanwhile, the B50 biodiesel mandate in Indonesia, the world's largest palm oil supplier, officially took effect on July 1, reinforcing forecasts of stronger domestic consumption and providing support to the market.

Malaysian palm oil futures edged lower to below MYR 4,560 per tonne, giving back part of the prior session's gains as a stronger ringgit and weaker Dalian palm oil futures weighed on sentiment. Additional pressure came from crude oil prices, which fell to their lowest since February amid signs of progress in indirect U.S.-Iran talks, reducing support for biofuel-linked vegetable oils. Traders also remained cautious ahead of key monthly supply and demand reports due later this month. Still, losses were limited by firmer rival edible oils on the Chicago Board of Trade. On the fundamental side, Indonesia's new B50 biodiesel mandate officially took effect on July 1, supporting expectations of stronger domestic palm oil consumption. Meanwhile, official data showed Indonesia exported 8.92 million tonnes of crude and refined palm oil during January-May, up 7.4% yoy. Cargo surveyors noted that palm oil exports during June 1-25 rose 10.6%-11.1% from May, pointing to improving overseas demand.

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.