Key Takeaways
- Malaysian palm oil futures fell from a 21-month high.
- Weak exports and expectations of rising stocks pressured prices.
- Technical analysis suggests potential for further price movement.
Malaysian palm oil futures retreated from a 21-month high on Thursday, trading little changed at 4,996 ringgit ($1,220.17) a metric ton by midday. The benchmark contract, which earlier in the day hit its highest level since December 2024, faced pressure from weak September exports and expectations that end-month stocks could rise to around 3 million tons.
Paramalingam Supramaniam, a director at Selangor-based brokerage Pelindung Bestari, noted that 'Palm oil fundamentals remain weighed down by weak September exports and expectations that end-month stocks could rise to around 3 million tons.'
However, the market received some support from speculation that India may cut import duties on vegetable oils and that Indonesia could raise its biodiesel blending mandate. Dalian’s most-active soyoil contract rose 0.4%, while its palm oil contract gained 0.18%. Soyoil prices on the Chicago Board of Trade were down 0.29%.
The ringgit, the currency of trade for palm oil, weakened 0.31% against the dollar, making the commodity cheaper for buyers holding foreign currencies. Oil prices also eased, extending losses on reports of Saudi Arabia offering extra crude cargoes through Oman, which reduced fears of supply disruptions. However, prices stayed above $100 on concerns about the Middle East conflict expanding.
Palm oil output in the major producing region of Kalimantan in Indonesia could fall by 12% to 15% in the fourth quarter, due to prolonged dry weather and widespread fires. Cargo surveyors estimated that exports of Malaysian palm oil products for September 1 to 15 fell between 17.8% and 25.6% from a month earlier.
Technical analyst Wang Tao from Reuters suggested that palm oil is biased to break a resistance at 4,903 ringgit per ton and bounce more towards 4,930 ringgit.
The market remains closely watched, with ongoing factors such as export trends, stock levels, and global economic conditions influencing future price movements.
Palm oil fundamentals remain weighed down by weak September exports and expectations that end-month stocks could rise to around 3 million tons.
Paramalingam Supramaniam, Director at Selangor-based brokerage Pelindung Bestari
