Palm oil continues to fall on weak export demand

Malaysian palm oil futures extended losses for a second consecutive session on Wednesday, August 26. The November contract on Bursa Malaysia fell by 93 ringgit, or 1.88%, to 4,853 ringgit ($1,206) per ton. Prices had declined by 1.43% in the previous session.

The market came under additional pressure following a recent sharp rally that reduced palm oil’s competitiveness against soybean oil. By August 21, prices had risen for five consecutive sessions, gaining 6.54% and exceeding 5,000 ringgit per ton for the first time since December 2024.

Market participants noted that soybean oil at Indian ports is currently cheaper than palm oil, weighing on demand for the latter. Meanwhile, Malaysian palm oil exports during August 1–25 were estimated to have fallen by 11.4–20% from the previous month.

Weak exports are raising the risk of higher inventories in Malaysia ahead of the seasonal peak in production in September-October. Analysts say that without a significant recovery in demand, stocks could continue to build and put additional pressure on prices.

A drop in crude oil prices of more than $2 per barrel to a two-week low also weighed on the market, making palm oil less attractive as a biodiesel feedstock. Additional pressure came from a 0.54% strengthening of the Malaysian ringgit against the dollar, while Chicago soybean oil futures fell by 1.68%.

Tags: palm oil, futures, prices, Malaysia