Palm Oil Subdued, Heads for Second Straight Weekly Loss

Malaysian palm oil futures steadied near MYR 4,900/t after recent declines, as firmer Dalian edible oil prices were offset by softer Chicago soyoils. Meanwhile, crude oil prices strengthened amid renewed U.S.–Iran hostilities, raising supply concerns and supporting sentiment. Rising El Niño risks added a bullish factor, with drier conditions threatening Southeast Asian production. Output in top producer Indonesia is projected to fall 2.9% to 56.8 million tons in 2027. Indonesia is also set to maintain its B50 biodiesel mandate next year, with implementation reportedly reaching 80% so far. Demand prospects improved in India, where refiners imported record soyoil volumes and the most palm oil in six months ahead of festivals. However, futures were set for a second weekly loss, pressured by weak exports, as cargo surveyors estimated August shipments fell 6.5–14.9% from July. Meanwhile, ample supply persisted, with Malaysian inventories at a five-month high in July.

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.