Key Takeaways
- Malaysian palm oil futures gained for a second consecutive week.
- Prices tracked the performance of competing vegetable oils, particularly Dalian's soyoil contract.
- Technical analysts predict further gains towards July’s high.
Malaysian palm oil futures rose for a second straight week on Friday, despite being dragged down by weakness in Dalian vegetable oil prices. The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange closed at 4,594 ringgit ($1,123.23) per metric ton, marking a decline of 12 ringgit or 0.26% from its previous close.
According to a trader based in Kuala Lumpur, the Bursa Malaysia crude palm oil futures opened marginally lower and tracked the mixed performance of competing vegetable oils. 'Prices are likely to consolidate within a narrow range as market participants await fresh catalysts,' the trader noted, highlighting the cautious sentiment among traders.
While Dalian’s most-active soyoil contract shed 0.57% and its palm oil contract declined 0.26%, the Chicago Board of Trade saw soy oil prices increase by 1.35%. This fluctuation in global vegetable oil markets reflects the competitive dynamics within the global market, where palm oil competes for a share of the demand.
Stronger crude oil futures have made palm oil more attractive as a biodiesel feedstock, potentially driving up its value. The U.S. and Iran’s recent escalation of attacks across the Gulf, coupled with threats to shipping in the Red Sea and the Strait of Hormuz, have added geopolitical tensions that could further impact global commodity prices.
The U.S. Climate Prediction Center has reported a strengthening El Nino event over the past month, which is forecasted to intensify through 2026 and continue into early 2027. This weather phenomenon can influence agricultural production and supply chains, potentially affecting palm oil prices in the coming months.
Technical analyst Wang Tao from Reuters stated that Malaysian palm oil still targets its July 9 high of 4,630 ringgit per metric ton as it seems to have broken the upper trendline. 'The market is showing signs of strength and could continue to climb towards this level,' he said.
'Bursa Malaysia crude palm oil futures opened marginally lower, tracking the mixed performance of competing vegetable oils.'
Kuala Lumpur-based trader, Trader
'Prices are likely to consolidate within a narrow range as market participants await fresh catalysts.'
Kuala Lumpur-based trader, Trader
