Palm Oil Holds Near MYR 4,900 on Supply Concerns

Malaysian palm oil futures edged higher, hovering near MYR 4,900 per tonne after recent weakness, supported by firmer soyoils on China’s Dalian markets and expectations of tighter supplies. Indonesia’s B50 biodiesel mandate is set to divert more palm oil to domestic use, while El Niño risks could curb output in both Indonesia and Malaysia. Demand prospects also improved as palm oil imports by top consumer India rose 7% from July to 782,761 tonnes in August, the highest since February, with refiners replenishing stocks ahead of the festival season. Separately, Malaysia raised its October crude palm oil reference price but kept the export duty at 10%. However, a stronger ringgit tempered gains, along with weaker crude oil prices amid renewed efforts to ease Middle East tensions. Market focus now turns to a potential import tariff cut in India, with an official announcement expected soon that could sway demand for Malaysian palm oil.

Malaysian palm oil futures hovered below MYR 4,910 per tonne, reversing recent gains as weakness in rival edible oils on Dalian and Chicago markets weighed on sentiment. Prices also pulled back from a 21-month high on profit-taking, while sluggish exports added pressure, with cargo surveyors estimating September 1–15 palm oil shipments fell between 17.8% and 25.6% from August. Crude oil also eased as extra cargoes tempered supply concerns, reducing palm’s biodiesel appeal. Even so, futures were still on track for a weekly gain of about 1.9%, supported by expectations of tighter supplies ahead. Indonesia’s B50 mandate is set to divert more palm oil to domestic use, while El Niño risks could curb output in both Indonesia and Malaysia. In India, imports rose 7% in August to 782,761 tonnes, the highest since February, as refiners replenished stocks ahead of the festival season. Separately, Malaysia raised its October crude palm oil reference price but kept the export duty unchanged at 10%.

Malaysian palm oil futures surged over 2-1/2% to around MYR 5,015 per tonne, extending recent gains as trade resumed after a holiday. A weaker ringgit and expectations of tighter supply underpinned sentiment, with Indonesia’s B50 biodiesel mandate set to divert more palm oil to domestic use and El Niño risks clouding output in Indonesia and Malaysia. Crude oil prices holding above USD 100 per barrel further boosted palm’s appeal as a biodiesel feedstock. In India, the world's largest palm oil consumer, August imports rose 7% month-on-month to 782,761 tonnes, the highest since February, as refiners replenished stocks ahead of the festival season between August and November. Separately, Malaysia raised its October crude palm oil reference price, keeping the export duty at 10%. However, weaker exports tempered upside momentum, with cargo surveyors estimating shipments fell between 17.8–25.6% in the first half of September compared with the same period in August.