Palm oil falls for a second straight session on higher output outlook

Malaysian palm oil futures closed lower on Monday for a second consecutive session. The benchmark October contract on the Bursa Malaysia Derivatives Exchange fell by 14 ringgit, or 0.3%, to 4,629 ringgit per ton. Expectations of higher production continued to weigh on prices, although stronger export demand limited the decline.

According to Paramalingam Supramaniam, director of brokerage firm Pelindung Bestari, July exports, particularly shipments to India, were stronger than in the previous month. However, July production is estimated to have increased by 7–9%, in line with analysts’ expectations. Market participants also expect robust demand to continue through August.

Cargo surveyors estimate that Malaysian palm oil exports increased by 12.1–19.5% in July compared with June. A Reuters survey showed exports rising 14.8%, while production increased 7.4%, pushing inventories to their highest level in five months. The Malaysian Palm Oil Board (MPOB) is scheduled to release its monthly supply and demand report on August 10.

The market was also pressured by weaker prices for competing vegetable oils. Dalian’s most-active soyoil contract slipped 0.11%, while its palm oil contract lost 0.88%. Soyoil futures on the Chicago Board of Trade (CBOT) declined 0.21%. Palm oil prices typically track movements in rival edible oils as they compete in the global vegetable oil market.

Crude oil prices also fell sharply after U.S. President Donald Trump refrained from launching new strikes against Iran, favoring diplomatic efforts and the potential reopening of the Strait of Hormuz. Lower crude oil prices reduce the attractiveness of palm oil as a biodiesel feedstock. Meanwhile, the Malaysian ringgit weakened 0.24% against the U.S. dollar, making Malaysian palm oil slightly more competitive for overseas buyers.

Tags: prices, palm oil