Palm oil at 2-week high amid supply concerns

Malaysian palm oil futures closed at the highs of recent days as weakness in the Chicago soybean oil contract and lower export estimates were offset by expectations of falling production.

Bids for January 2025 delivery came in at $1,086.40/ton, the highest delivery price in the past 2 weeks.

A sharp drop in Chicago soybean oil futures after U.S. President Donald Trump threatened Colombia with sanctions affected the prices of the other contracts, said Anilkumar Bagani, head of commodity research at Mumbai-based Sunvin Group. “Malaysia’s export performance has also been consistently weak as seen between Jan. 1 and Jan. 25,” he said.

Bagani also said Malaysian production fell 14% from Jan. 1 to 20 compared with the previous month, citing estimates from the Malaysian Palm Oil Association and other organizations.

The most active Dalian soybean oil contract rose 1.63%, while the palm oil contract added 2.08%. Soybean oil prices on the Chicago Mercantile Exchange fell 0.62%.

Palm oil follows the price performance of competing edible oils as it competes for a share of the global vegetable oil market.

Indonesia’s palm oil stocks rose 3.2% in November from the previous month to 2.58 million tons, according to Indonesian palm oil association GAPKI, as a slowdown in exports offset a decline in production. Freight experts estimate that Malaysian palm oil exports in the Jan. 1-25 period were down 18.9-24.1% from the same period a month earlier. Weaker crude oil futures make palm oil a less attractive feedstock option for biodiesel.

Tags: prices, palm oil