Palm oil falls due to weak export demand

AmSpec Agri Malaysia, an independent survey company, estimates that Malaysia’s exports of palm oil products fell 18.2-23% between January 1 and January 20. Also the day before, Intertek Testing Services (ITS) reported that Indonesia exported 23.9 million tons of palm oil for the year, down 8.9% from 2023. Oil shipments to China, a key market for Indonesian exporters, fell 28.1% to 3.86 million tons.

Malaysian palm oil futures are on track for a three-session drop amid freight inspectors’ data pointing to weak export demand and a stronger ringgit, which strengthened 0.89% against the U.S. dollar. A stronger ringgit makes palm oil less attractive to foreign exchange holders.

The benchmark palm oil contract for delivery in April on the Bursa Malaysia derivatives exchange lost 52 ringgit, or 1.22 percent, to 4,208 ringgit ($949.24) per tonne at the close.

“Crude palm oil futures on the Bursa Malaysia Derivatives exchange opened lower today … pressured by a sell-off in the Chicago soybean oil market and South American crude degummed soybean oil FOB market on Wednesday evening, as well as Chinese vegetable oil futures during Asian hours today,” according to the head of commodity research at Mumbai-based brokerage Sunvin Group.

The most-active soybean oil contract in Dalian fell 1.29%, while the palm oil contract was down 2.25%. Soybean oil on the Chicago Mercantile Exchange is down 2% in recent sessions.

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

Malaysian palm oil futures are expected to average 5% year-on-year growth in 2025 as Indonesia’s largest producer increases consumption of palm oil-based biodiesel, although competition from cheaper rivals is expected to limit upside potential.

Tags: prices, palm oil