Palm oil prices rise for third consecutive session despite record stocks in Malaysia

Malaysian palm oil futures closed higher for the third consecutive session on October 14, supported by rising crude oil prices and gains in rival vegetable oils on the Chinese market. The December contract on Bursa Malaysia Derivatives increased by 17 ringgit, or 0.36%, to 4,699 ringgit ($1,151.72) per ton. High energy prices and stronger export demand provided support to the market.

One of the main drivers of the increase was higher crude oil prices amid escalating tensions in the Middle East and new threats to maritime shipping. Elevated crude oil prices make palm oil more attractive as a feedstock for biodiesel production. Meanwhile, soybean oil futures on China’s Dalian exchange rose by 0.71%, while palm oil futures gained 0.98%. Soybean oil prices on the Chicago Board of Trade (CBOT) increased by 0.03%.

Despite rising prices, market fundamentals in Malaysia remain challenging due to record-high inventories. In September, palm oil stocks increased to 3.51 mln tons amid all-time high production, exceeding market expectations. Ample supplies continue to limit the potential for further price increases.

Meanwhile, export demand is showing signs of recovery. According to cargo surveyors, Malaysian palm oil exports during October 1–10 increased by 33.5–37.7% compared with the same period in September. Malaysia also lowered its November crude palm oil reference price but maintained the export duty at the maximum rate of 10%.

Another factor influencing the market was a 0.1% appreciation of the Malaysian ringgit against the US dollar, making palm oil slightly more expensive for foreign buyers. Further price movements will depend on global crude oil prices, biodiesel demand, export performance, and the reduction of accumulated stocks in Malaysia. At the same time, developments in the palm oil market could affect soybean and sunflower oil prices, as these products compete in the global vegetable oils market.

Tags: palm oil, prices, Malaysia