Palm oil prices lost more than 1% on Friday

Malaysian palm oil futures fell by more than 1% on Friday after official data showed that inventories had climbed to their highest level in four months. The benchmark September contract on Bursa Malaysia dropped 1.81% to 4,511 ringgit ($1,109) per ton. Despite Friday’s decline, the contract gained 0.69% for the week, ending a two-week losing streak.

According to the Malaysian Palm Oil Board (MPOB), production recovered faster than demand in June, leading to higher inventories. Traders said the increase in stockpiles indicates weaker market absorption and is likely to keep downward pressure on prices.

Additional pressure came from weaker prices for competing vegetable oils. Dalian’s most-active soyoil futures fell nearly 1%, while palm oil futures declined about 1.8%. Chicago soyoil futures also edged lower. Since palm oil competes with other vegetable oils in the global market, weaker prices for rival oils also weighed on palm oil values.

The market received some support from export data. Cargo surveyors estimated that exports of Malaysian palm oil products during July 1–10 increased by 1.6%–5.1% compared with the same period of the previous month, pointing to a gradual recovery in external demand.

A longer-term supportive factor remains Indonesia’s biodiesel policy. Following the planned increase in the biodiesel blend from B40 to B50, the country’s crude palm oil consumption for biofuel production is expected to rise from 15.2 mln tons to 16.3–17 mln tons annually, which could provide additional support to global palm oil demand.

Tags: prices, palm oil