Malaysian palm oil prices end the week higher

Malaysian palm oil futures closed higher on Friday, November 13, supported by expectations of a price recovery in the coming months. The benchmark January contract on the Bursa Malaysia Derivatives Exchange rose by 22 ringgit, or 0.5%, to 4,462 ringgit ($1,093) per ton. Over the week, futures gained 4.79%, posting their first weekly increase in three weeks.

Market sentiment was supported by forecasts from leading analysts presented at a palm oil conference in Indonesia. The effects of drought caused by El Niño are expected to begin affecting production in the first quarter of 2027, particularly in Indonesia, potentially supporting further increases in palm oil prices.

Gains in competing edible oils provided additional support. On the Dalian Commodity Exchange, soyoil futures rose by 0.21%, while palm oil futures gained 0.44%. In Chicago, soyoil prices increased by 0.79%. Palm oil generally follows price movements in competing edible oils, as they compete for a share of the global market.

Meanwhile, the Malaysian ringgit weakened by 0.22% against the US dollar, making palm oil more attractive to foreign buyers. However, market sentiment remained restrained by uncertainty surrounding the possible introduction of a new service fee in Indonesia, which could affect costs for industry participants.

In addition, weakness in global crude oil prices is limiting the upside potential for palm oil by reducing its competitiveness as a biodiesel feedstock. Further price movements will depend on production prospects in Indonesia, developments in competing edible oil markets and potential regulatory changes in the industry.

Tags: palm oil, Malaysia