Palm Oil Sinks, Steep Weekly Loss Looms

Malaysian palm oil futures slipped around 2% to below MYR 4,700 per tonne, extending last week’s decline to a six-week low. A stronger ringgit and weaker soybean oil on the Chicago Board of Trade weighed on sentiment. Meanwhile, a pullback in crude oil after recent gains added pressure amid expectations that the Strait of Hormuz could reopen and U.S. curbs on Iranian exports could ease. Rising Malaysian inventories and sluggish demand from India, the world’s largest vegetable-oil buyer, further dampened the market, though industry officials noted El Niño’s impact has yet to materialise. Still, losses were partly cushioned by India’s move to cut import duties on crude and refined vegetable oils ahead of the September–November festive season to curb food inflation. On the supply side, Indonesia may face a shorter-than-usual wet season from November, potentially affecting crop conditions. For the week, futures are down about 4.6%, erasing the prior week’s gains in a steep reversal.

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%.