Palm Oil Edges Higher as Export Demand Improves

Malaysian palm oil futures remained subdued, trading near MYR 4,960 per tonne, pressured by a stronger ringgit and weaker edible oil prices in the Dalian and Chicago markets. Meanwhile, exports remained sluggish, with cargo surveyors estimating August palm oil shipments fell between 6.5% and 14.9% from July, while inventories climbed to a five-month high in July. In India, heavy vegetable-oil buying congested major ports, delaying vessel unloading by up to 10 days as storage tanks overflow, potentially dampening near-term import demand. In top supplier Indonesia, new technical regulations tightened central government control over key export commodities, including palm oil, under President Prabowo Subianto’s plan to boost state earnings from natural resources. Still, losses were cushioned by firmer crude oil amid renewed Middle East tensions. Meanwhile, unusually dry conditions across Southeast Asia raised concerns over yields after triggering fires and haze in Borneo and Sumatra.

Malaysian palm oil futures extended their upward momentum, hovering around MYR4,950 per tonne as a weaker ringgit and stronger edible oil prices in Dalian and Chicago lent support. Crude oil’s rally, driven by fears of prolonged Middle East conflict and supply risks, added further momentum. At the same time, an unusually severe El Niño has deepened dry conditions across Southeast Asia, sparking fires and haze in Borneo and Sumatra, with more than 202,000 hectares reportedly burned, heightening concerns over crop yields. Yet gains were tempered by sluggish exports, with cargo surveyors estimating August shipments fell between 6.5% and 14.9% from July, while inventories climbed to a five-month high. In India, heavy vegetable-oil buying has congested major ports, delaying vessel unloading by up to 10 days as storage tanks overflow and refiners struggle to clear cargo, a bottleneck that could dampen near-term import demand.

Palm oil climbed above 4,970 ringgit per tonne, moving toward its highest level since December 2024, as traders assessed the potential impact of severe forest fires across Indonesia, the world’s largest producer. Thick haze has spread across parts of Southeast Asia, disrupting harvesting as workers are diverted to firefighting efforts, while prolonged smoke and reduced sunlight could also weigh on palm fruit development. The unusually severe El Niño weather pattern is exacerbating dry conditions, increasing the risk of fires and prolonging cross-border haze. More than 202,000 hectares have reportedly burned across Borneo and Sumatra, with pollution levels rising in Indonesia as well as Singapore, Malaysia and the Philippines. However, an expected increase in rainfall around October could help contain the fires ahead of the wet season. Palm oil also benefited from firmer crude and vegetable oil prices.