Palm Oil Rebounds on Firmer Dalian, India Duty Cuts

Malaysian palm oil futures strengthened, hovering near MYR 4,790 per tonne after recent declines, boosted by a weaker ringgit, firmer edible oils on the Dalian market, and India’s decision to cut basic import duties on crude and refined vegetable oils ahead of the September–November festive season, in an effort to curb domestic food inflation. Supply concerns also lent support, as top supplier Indonesia is expected to face a shorter-than-usual wet season from November, potentially affecting crops. However, the upside was tempered by expectations of higher Malaysian inventories, with a brokerage forecasting end-stocks to reach around 3 million tonnes, or slightly higher, by September-end, driven by a double-digit rise in production, particularly in Sabah. Exports also stayed sluggish, with cargo surveyors noting shipments fell between 12.8%–24.7% mom during September 1–20. In the energy market, softer crude prices amid improving Gulf supply also weighed on sentiment.

Malaysian palm oil futures extended recent losses, hovering below MYR 4,750 per tonne and nearing a six-week low, pressured by weaker edible oils on the Dalian and Chicago exchanges and a further drop in crude oil prices on hopes for a diplomatic resolution to the U.S.-Iran conflict at the UN. Export signals were also weak, with cargo surveyors estimating shipments fell between 12.8%–24.7% mom during September 1–20, while EU imports for the 2026/27 season plunged 26% to 0.56 million tonnes. Still, losses were limited by stronger demand prospects in top consumer India, where August palm oil imports rose 7% from July to 782,761 tonnes, the highest since February, as refiners replenished stocks ahead of festivals. On the supply side, the world's largest palm oil producer, Indonesia, is expected to face a shorter-than-usual wet season from November, potentially affecting crop conditions. Meanwhile, Malaysia raised its October CPO reference price but kept the export duty unchanged at 10%.

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.