Palm oil posts strongest weekly gain in nearly six months

Malaysian palm oil prices continued to rise, approaching MYR 5,000/t and reaching their highest level since December 2024. Futures have gained nearly 6% this week, marking their strongest weekly increase in 24 weeks and a third consecutive weekly advance.

The market is primarily supported by developments in Indonesia, where buyers have stepped up purchases ahead of the full implementation of the B50 biodiesel mandate in October. Increased use of palm oil for biodiesel could reduce export supplies from the world’s largest producer. Stronger vegetable oil prices on China’s Dalian exchange provided additional support.

Weather concerns are another bullish factor. The developing El Niño is raising the risk of worsening dryness in Indonesia and Malaysia, potentially weighing on palm oil production in the coming months.

However, further price gains could be limited by ample supplies in Malaysia, where palm oil inventories climbed to a five-month high in July. Indian refiners may also increasingly favor cheaper soybean oil, with imports expected to remain high in August.

Export indicators also remain weak. According to cargo surveyors, Malaysian palm oil shipments during August 1–20 fell by 5.5–13.2% compared with the same period in July. The market is therefore balancing expectations of tighter future supplies due to B50 and El Niño against currently weak export demand.

Tags: futures, prices, Malaysia, palm oil