Palm Oil Holds at Elevated Level

Malaysian palm oil futures hovered above MYR 4,850 per tonne, holding their jump since mid-August on strong demand for vegetable oils. Biofuel feedstock costs saw a broad increase from palm oil and soy oil, with persistent risks of an escalation in the Middle East and concerns of lower crude oil output from Saudi Arabia lifting demand for biofuel alternatives. On top of that, Indonesia’s B50 biodiesel mandate is set to divert more palm oil to domestic use. Likewise, imports from top consumer India rose 7% from July to 782,761 tonnes in August, the highest since February, as refiners replenished stocks ahead of the festival season. Separately, Malaysia raised its October crude palm oil reference price while keeping the export duty at 10%. In turn, the forecast of one of the most aggressive El Ninos in history continued to threaten supply from major producers Malaysia and Indonesia.

Malaysian palm oil futures strengthened, hovering above MYR 4,850 per tonne and snapping recent declines. Firmer soyoils on the Chicago markets supported sentiment, along with elevated crude oil prices as geopolitical risks in the Middle East persisted. Expectations of tighter supplies also lent support, as 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 improved as palm oil imports by top consumer India rose 7% from July to 782,761 tonnes in August, the highest since February, as refiners replenished stocks ahead of the festival season. Separately, Malaysia raised its October crude palm oil reference price while keeping the export duty at 10%. However, gains were tempered by weakness on the Dalian exchanges and signs of sluggish exports, with cargo surveyors estimating Malaysian palm oil product shipments fell between 12.8%–24.7% mom during September 1–20.

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.