Palm Oil Eases on China Demand Concerns, Stronger Ringgit

Malaysian palm oil futures edged lower after recent gains, hovering below MYR 4,600 per tonne amid a firmer ringgit and weaker demand prospects from major buyer China as the economy grew at its slowest pace in 3-1/2 years. In India, the top palm oil importer, purchases fell to a 14-month low in June as demand fell and a narrowing price discount to rival oils reduced buying interest. Meanwhile, the EU confirmed imports of palm oil derivatives will be subject to its anti-deforestation rules from December 2027. Still, losses were capped by strength in rival edible oils on the Dalian and Chicago markets, along with stronger crude oil prices after U.S. President Trump reimposed a naval blockade in the Strait of Hormuz. Meanwhile, the B50 biodiesel mandate in Indonesia, the largest supplier, is expected to spur domestic palm oil consumption. Traders now await export data for the first half of July, after shipments rose 1.6%–5.1% in the July 1–10 period compared with the same period in June.

Malaysian palm oil futures climbed almost 1% to above MYR 4,550 per tonne, recovering from recent losses as a weaker ringgit and firmer edible oil markets in Dalian and Chicago markets lifted sentiment. Gains were further supported by a rally in oil prices on concerns over potential disruptions to energy flows through the Strait of Hormuz. Exports also improved, with cargo surveyors noting July 1–10 shipments rose 1.6%–5.1% from June. In top supplier Indonesia, rising biodiesel mandates to B50 are expected to boost domestic consumption. However, upside was capped by news that EU imports of palm oil derivatives will be subject to the bloc's anti-deforestation rules from Dec 2027, while June data showed Malaysian inventories grew 4.8% mom as production rose 8.1% on seasonal output. In India, imports fell to a 14-month low in June amid weak demand and narrowing discounts to rival oils. Traders stayed cautious ahead of China’s Q2 GDP prints after solid June trade data from the major buyer.

Malaysian palm oil futures rebounded above MYR 4,500 per tonne after recent sharp losses, supported by a weaker ringgit, stronger edible oils in Dalian and Chicago, and firmer crude oil as renewed Middle East tensions lifted sentiment. Exports also improved, with cargo surveyors noting July 1–10 shipments rose 1.6%–5.1% from the same period in June. In top producer Indonesia, a move to raise the biodiesel mandate to B50 from B40 is expected to spur palm oil consumption to 16.3–17.0 million tons this year from 15.2 million. Gains, however, were capped after the Malaysian Palm Oil Board said June inventories climbed 4.8% mom to a four-month top, while production grew 8.1% on seasonal output. Meanwhile, palm oil imports in India, the world's largest consumer, fell to a 14-month low in June amid weak demand and a narrowing price advantage over rival oils. Traders also stayed cautious ahead of China's June trade data and Q2 GDP, which could shape the demand outlook from another major buyer.