Palm oil falls to one-week low amid weak exports

Malaysian palm oil futures extended their decline, falling below MYR 4,900/t and reaching their lowest level in a week.

A stronger Malaysian ringgit and weaker soybean oil prices in Chicago weighed on the market. Additional pressure came from lower crude oil prices amid renewed expectations that the Strait of Hormuz could reopen.

External demand also remains weak. According to Intertek Testing Services, Malaysia’s palm oil product exports during August 1–25 fell by 20% compared with the same period in July. Meanwhile, the country’s palm oil inventories rose to a five-month high in July, adding further pressure to prices.

In Indonesia, the world’s largest palm oil producer, exports declined by 9.2% year-on-year in June, according to palm oil association GAPKI. However, firmer soybean oil prices on the Dalian exchange helped limit further losses in palm oil futures.

Palm oil prices are also supported by concerns over a developing El Niño, which could intensify dry conditions and reduce production in Indonesia and Malaysia. Another supportive factor is Indonesia’s planned full implementation of the B50 mandate from October 1, which will increase the biodiesel share in the fuel blend to 50%.

Tags: prices, Malaysia, palm oil