Palm Oil Heads for First Weekly Loss in Four Weeks

Malaysian palm oil futures hovered near MYR 4,850 per tonne, rebounding from recent declines as firmer rival edible oils on Dalian and Chicago exchanges lifted sentiment. Elevated crude oil prices and mounting El Niño risks, which stoked concerns over dryness and weaker output across Southeast Asia, added support. Indonesia’s planned full rollout of its B50 mandate on October 1 is also expected to bolster domestic consumption and trim exportable supplies. However, futures were headed for their first weekly loss after three straight gains, down about 3.3% so far. Broader weakness reflected softer demand and ample supply, with cargo surveyors noting palm oil exports for August 1–25 fell between 11.4%–20% from July. Meanwhile, inventories hit a five-month high in July, intensifying supply pressure. Demand from India may face further headwinds as refiners turn to cheaper soyoil, with imports in August projected to be strong, underscoring shifting preferences in the world’s largest buyer.

Malaysian palm oil futures traded above MYR 4,850 per tonne, rebounding from recent losses as a weaker ringgit boosted competitiveness and firmer edible oils on the Dalian exchange lent support. Bargain buying also emerged after prices touched a one-week low. Weather risks added to sentiment, with signs of a developing El Niño raising concerns over potential dryness and output cuts in major producers in Southeast Asia. Meanwhile, the B50 biodiesel mandate in top supplier Indonesia is slated for full implementation on October 1, reinforcing expectations of stronger domestic consumption and tighter export supply. However, gains were capped by softer soybean oil prices on the Chicago exchange and a further retreat in crude oil. On the demand side, cargo surveyors estimated Malaysian palm oil product exports for August 1–25 fell 11.4%–20% from the same period in July, underscoring sluggish momentum. Ample supply also weighed, with Malaysian inventories rising to a five-month high in July.

Malaysian palm oil futures extended losses, trading below MYR 4,900 per tonne and touching their lowest level in a week as traders returned from a holiday. Sentiment was pressured by a stronger ringgit and weaker soyoil prices on the Chicago market, while crude oil fell on renewed hopes that the Strait of Hormuz could reopen. Demand concerns also weighed, with cargo surveyor Intertek Testing Services noting that palm oil product exports for August 1–25 dipped 20% from the same period in July. Ample supplies added to the bearish tone, as Malaysian palm oil inventories climbed to a five-month high in July. Separately, exports by top grower Indonesia fell 9.2% yoy in June, according to palm oil association GAPKI. Still, losses were capped by firmer Dalian soyoil prices. Concerns that a developing El Niño could intensify dryness and curb output in Indonesia and Malaysia also provided support, along with Indonesia's planned full implementation of its B50 mandate from Oct 1.