Palm Oil Rebounds on Dalian Gains, El Niño Risks

Malaysian palm oil futures strengthened, trading near MYR 4,990 per tonne after recent losses, lifted by firmer edible oil prices on the Dalian market. Sentiment was also supported by rising El Niño risks, which could bring drier conditions to Southeast Asia. Palm oil output in top supplier Indonesia is expected to fall 2.9% to 56.8 million tonnes in 2027. Indonesia will also maintain its B50 biodiesel mandate next year, with implementation reportedly reaching 80% so far. In India, refiners imported a record volume of soyoil in August and the most palm oil in six months, ahead of the festive season, providing additional demand support. However, gains were capped by a stronger ringgit and weaker crude oil prices. Export prospects also remained weak, with cargo surveyors estimating Malaysian palm oil shipments fell between 6.5% and 14.9% in August from July. Meanwhile, ample supply remained a headwind, with Malaysian palm oil inventories rising to a five-month high in July.

Malaysian palm oil futures hovered below MYR 4,950 per tonne, ending their recent rally as weaker edible oils on the Dalian and Chicago exchanges weighed on sentiment. Weak exports added pressure, with cargo surveyors estimating Malaysian palm oil shipments fell 6.5%–14.9% in August from the prior month. Ample supply also remained a concern, with inventories rising to a five-month high in July. Meanwhile, EU palm oil imports for the 2026/27 season, which began in July, plunged 21% yoy, pointing to weaker demand from a key market. Demand from India could face headwinds as refiners favour cheaper soyoil, although expectations for strong August vegetable oil imports may provide some support. Losses were partly cushioned by a weaker ringgit, which makes palm oil cheaper for overseas buyers. Firmer oil prices provided further support amid concerns over supply disruptions, while rising El Niño risks raised worries about drier conditions and potential production losses across Southeast Asia.

Malaysian palm oil futures jumped near 2% to near MYR 4,900 per tonne, extending the previous session’s rally and hitting a one-week high as traders returned from a holiday. Sentiment was lifted by firmer edible oils on the Dalian and Chicago exchanges, along with a weaker ringgit. Stronger crude oil prices also provided support amid renewed concerns over potential supply disruptions. Meanwhile, growing El Niño risks added to concerns over drier conditions and potential production losses across Southeast Asia. However, gains were tempered by weak export demand and ample supplies. Cargo surveyors estimated Malaysian palm oil exports fell between 11.4% and 20% during August 1-25 from the same period in July, while inventories climbed to a five-month high in July, reinforcing concerns over supply pressure. Demand from India could also face headwinds as refiners favour cheaper soyoil, although expectations for strong August vegetable oil imports may provide some underlying support.