Palm Oil Set for Biggest Weekly Gain in Near Six Months

Malaysian palm oil futures extended their gains, trading around MYR 4,990 per tonne and reaching their highest level since December 2024. The contract is also on track for its biggest weekly rise in 24 weeks, up nearly 6% so far, marking its third straight weekly advance. The rally was supported by strength in Dalian vegetable oils, while in top producer Indonesia, buyers have stepped up purchases ahead of the full implementation of the B50 biodiesel mandate in October. Meanwhile, the developing El Niño raised concerns of worsening dryness that could curb output in Indonesia and Malaysia. Still, upside was capped by ample supply, with Malaysian inventories climbing to a five-month high in July. Demand risks also weighed, as India’s refiners may favor cheaper soyoil, with record imports expected in August. Meanwhile, cargo surveyors estimated palm oil shipments during August?1–20 fell 5.5%–13.2% from the same period in July, underscoring weak export momentum.

Palm oil extended a rally to around 4,965 ringgit per tonne, reaching the highest level since December 2024, boosted by stronger biofuel demand and growing concerns over production. Indonesia started its ambitious B50 biodiesel programme, which is expected to divert more palm oil toward domestic fuel production and reduce export availability. Buyers are moving to secure supplies ahead of the programme’s full implementation in October. At the same time, dry conditions have affected plantations in Indonesia and Malaysia, raising concerns about yields. The developing El Niño weather pattern could further worsen dryness across Southeast Asia, potentially limiting production in the world’s two largest palm oil-producing countries. The USDA expects global palm oil inventories to fall to a nine-year low in the 2026/27 season. Meanwhile, disruptions to sunflower oil exports from Russia and Ukraine are encouraging buyers to turn to alternative vegetable oils, adding further support to palm oil.

Malaysian palm oil futures extended their upward momentum, hovering around MYR 4,920 per tonne and holding near their highest level since early April. Firmer edible oils on the Dalian Commodity Exchange supported sentiment, while elevated crude oil prices provided additional support amid sporadic attacks in the Middle East. Meanwhile, the Malaysian Palm Oil Council projected palm oil prices to remain firm above MYR 4,600 in September, citing tightening supply and trade disruptions. However, high inventories could limit further gains, with Malaysian palm oil stocks climbing to a five-month high in July. In India, record soyoil imports expected in August could weigh on palm oil demand, as refiners may favor cheaper soyoil ahead of the festive season. Export signals were also mixed. Intertek estimated shipments fell 7.9% during August 1–15 from the same period in July, while AmSpec reported a 3.2% increase, underscoring uncertainty over near-term demand and keeping traders cautious.