Palm Oil Falls Further, Eyes First Weekly Rise in Three Weeks

Malaysian palm oil futures extended their decline, slipping below MYR 4,600 per tonne amid a stronger ringgit and weaker edible oils on the Dalian Exchange. Fresh data from the Malaysian Palm Oil Board showed June inventories rose to a four-month high of 4.8% from May, while production climbed 8.1% on stronger seasonal output. Production has accelerated further as mills in Perak struggle to process an influx of fresh fruit bunches. On the demand side, India's palm oil imports fell to a 14-month low in June due to sluggish consumption and a narrowing price discount over competing edible oils. Still, contracts remain on track for their first weekly gain in three, driven by the B50 mandate in top supplier Indonesia, which is expected to spur consumption to 16.3–17.0 million metric tons this year from 15.2 million previously. Meanwhile, cargo surveyors noted palm oil exports during July 1–5 rose 10.6%–11.1% from the same period in June, with traders awaiting full ten-day shipment data.

Malaysian palm oil futures traded lower, hovering below MYR 4,600 per tonne and retreating after recent gains as softer Chicago soyoil prices weighed on sentiment. Also, market participants remained cautious ahead of the Malaysian Palm Oil Board’s monthly report, with Reuters projecting stocks likely hit a record June high as output outpaced demand. In India, the world’s top buyer, June imports fell to a 14-month low on sluggish consumption and a narrowing discount versus rival oils. Still, losses were cushioned by a weaker ringgit, firmer edible oil prices on China’s Dalian exchange, and stronger crude oil, which boosts palm’s appeal as biodiesel feedstock. Demand prospects brightened after cargo surveyors estimated July 1–5 exports rose between 10.6% and 11.1% from the same period in June. Meanwhile, in China, another major importer, consumer prices rose less than expected while factory-gate inflation showed signs of peaking, underscoring a mixed backdrop for edible oil demand.

Malaysian palm oil futures traded above MYR 4,550 per tonne, rebounding from the prior session’s lull as a weaker ringgit and strength in Dalian and Chicago edible oil markets lent support. Exports also lifted sentiment, with cargo surveyors estimating July 1–5 palm oil shipments rose between 10.6% and 11.1% from the same period in June. A rally in crude oil prices added to the upside after U.S. airstrikes on Iran and renewed sanctions on its oil exports boosted palm’s appeal as a biodiesel feedstock. However, gains were capped by palm oil imports by top consumer India declining to a 14-month low in June amid sluggish demand and narrower discounts versus rival oils. Meanwhile, Reuters projected Malaysian inventories likely hit a record June high as output outpaced demand. At the same time, traders remained cautious ahead of the Malaysian Palm Oil Board’s monthly report later this week. In China, another key buyer, June CPI and PPI data will be closely watched for fresh cues on demand.