Malaysian palm oil futures closed at their highest level in two months on Thursday

Malaysian palm oil futures closed at their highest level in two months on Thursday, as the prospect of a production decline amid robust demand and expectations that the US will soon increase the share of biofuels in its blends supported the market.

Palm oil prices closed higher, following rising soybean oil prices, said David Ng, a trader at Iceberg X in Kuala Lumpur. Expectations of stronger export demand, as well as rising prices for competing oils the previous day, also pushed futures higher, analysts at Kenanga Futures noted in a note. They added that a production slowdown in January is expected to reduce Malaysian inventories, which have reached a seven-year high, and provide further support for growth. Kenanga Futures sees support for palm oil futures at 4,115 ringgit per tonne and resistance at 4,225 ringgit per tonne.

The benchmark April palm oil contract FCPO1 on Bursa Malaysia rose 44 ringgit, or 1.06%, to 4,198 ringgit (US$1,039.62) per metric tonne, its highest close since November 19, 2025.

The market rose on news that the US will soon publish final biofuel regulations, meaning increased demand for biofuels for diesel production, and that double-digit losses in palm oil production are possible in January, said Paramalingam Supramaniam, director of Selangor-based brokerage Pelindung Bestari.

He added that this will likely lead to higher prices for both soybean and palm oil.

In June, the U.S. Environmental Protection Agency proposed setting total biofuel blending capacity at 24.02 billion gallons and 24.46 billion gallons in 2026 and 2027, respectively, compared to 22.33 billion gallons in 2025.

“Export demand is also providing significant support. Therefore, the overall market is expected to remain positive in the first quarter of 2026,” Supramaniam said.

The most actively traded Dalian soybean oil contract rose 0.55%, while the palm oil contract rose 1.59%. Soybean oil prices on the Chicago Mercantile Exchange fell 0.28%.

Palm oil prices follow those of competing edible oils as it competes for share in the global vegetable oil market.

Oil prices fell, reversing gains from previous sessions, after US President Donald Trump downplayed threats against Greenland and Iran, and as investors assessed the supply and demand outlook.

Higher oil futures rates make palm oil a more attractive option for biodiesel production.

The ringgit strengthened 0.15% against the dollar, making the commodity slightly more expensive for buyers holding foreign currency.

(1 US dollar = 4.0380 ringgit)

Tags: Malaysia, palm oil