Palm oil falls on weak rival oils, bearish outlook

Malaysian palm oil futures plunged on Thursday, snapping two sessions of gains, as weakness in rival oils and a bearish outlook from industry analysts weighed down the contract.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange lost 96 ringgit, or 2.21%, to 4,509 ringgit ($1,015.31) a metric ton by the midday break.

“Chicago soyoil and Dalian palm oil are lower and in unison, Malaysian crude palm oil futures is reflecting the same,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

Expectations of a production recovery in the second half of this year added pressure to the contract, he added.

A recovery in palm oil production and lower imports by rate-sensitive consumers are expected to drive prices lower in the coming months, even as top producer Indonesia boosts biodiesel consumption, industry analysts told a conference in Kuala Lumpur this week.

“However, anecdotal evidence suggests that the production for the first quarter of 2025 remains weak, heavy rain in East Malaysia is keeping production anaemic,” he said.

Dalian’s most active soyoil contract was up 0.91%, while its palm oil contract dropped 1.09%. Soyoil prices on the Chicago Board of Trade (CBOT) fell 0.22%.

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

Exports of Malaysian palm oil products in the February 1-25 period are estimated to drop by 2.7%, according to cargo surveyor Intertek Testing Services. However, independent inspection company AmSpec Agri Malaysia estimated exports rose 1.2% month-on-month.

Palm oil looks neutral in the zone of 4,542 ringgit to 4,608 ringgit per metric ton, and an escape could suggest a direction.

Tags: Malaysia, palm oil, futures, benchmark contract, soyoil