Palm Oil Extends Gains

Malaysian palm oil futures rose further, trading above MYR 4,850 per tonne, supported by a weaker ringgit and higher crude oil prices amid persistent Middle East tensions. Supply concerns also lent support, as extra dry conditions in Indonesia and Malaysia raised risks to future output. However, gains were capped by softer edible oils on the Dalian markets. Meanwhile, August data from the Malaysian Palm Oil Board continued to paint a bearish picture, with inventories climbing 7.5% mom to an eight-month high, while production rose 1.4% and exports fell 7.5%. Early September shipments also stayed weak, with cargo surveyors noting an 11.7–17.5% drop in exports in the first 10 days from the same period in August. In India, heavy edible oil buying has congested major ports, delaying vessel unloading as storage tanks overflow, potentially curbing near-term import demand. In China, another major palm oil buyer, August economic data was mixed, suggesting uneven demand prospects.

Malaysian palm oil futures hovered above MYR 4,850 per tonne, reversing recent declines amid gains in rival edible oil markets. Bargain hunting also emerged after prices hit a two-week low. Firmer crude oil, underpinned by escalating Middle East hostilities, enhanced palm’s competitiveness as a biodiesel feedstock. Supply concerns also lingered, with unusually dry conditions and reduced fertiliser use in Indonesia and Malaysia raising risks to output. Still, upside momentum was checked by bearish monthly data from the Malaysian Palm Oil Board: August inventories climbed 7.5% to an eight-month high of 2.82m tonnes, production edged up 1.4% to 1.82m, and exports fell 7.5% to 1.29?m. Meanwhile, early September shipments remained weak, with cargo surveyors reporting an 11.7–17.5% drop in exports in the first 10 days versus August. Market caution also prevailed ahead of China’s August activity data later this week, with traders eyeing demand signals from another major palm oil buyer.

Malaysian palm oil futures edged lower, hovering below MYR 4,900 per tonne and extending their recent decline amid bearish monthly data from the Malaysian Palm Oil Board. In August, inventories rose 7.48% mom to an eight-month high of 2.82 million tonnes, while exports fell 7.5% to 1.29 million tonnes. Production, meanwhile, rose 1.39% to 1.82 million tonnes, adding to concerns over ample supplies. Early September shipments also remained weak, with cargo surveyors reporting that palm oil exports fell 11.7–17.5% in the first 10 days of the month from the same period in August. Higher crude oil prices capped weakness, with Brent rising above US$100 a barrel amid Middle East uncertainty, boosting palm oil’s appeal as a biodiesel feedstock. Unusually dry conditions and low rainfall in Indonesia and Malaysia over the past six weeks, exacerbated by reduced fertiliser application, also offered some support. Contracts are heading for a third straight weekly drop, down around 0.9% so far.