Palm oil prices rise nearly 4% over the week on stronger Malaysian exports

Malaysian palm oil futures closed higher on Friday, October 16, supported by stronger export demand and bargain buying following previous price declines. January contracts on the Bursa Malaysia Derivatives Exchange rose by 44 ringgit, or 0.93%, to 4,769 ringgit/t ($1,169.16/t). Futures gained 3.85% over the week, showing a significant recovery after earlier fluctuations.

The main factor supporting the market was a sharp increase in Malaysian palm oil exports during the first half of October. According to independent cargo surveyors, shipments from Malaysia rose by 43.2–58.3% during October 1–15 compared with the same period in September. Additional demand support came from India, where palm oil imports reached a seven-month high in September. Indian refiners increased their purchases of palm oil, favoring it over sunflower oil.

According to Anilkumar Bagani, research head at Sunvin Group, futures were supported by bargain buying after earlier price declines, as well as strong Malaysian export performance. Meanwhile, other vegetable oil markets recorded losses. On China’s Dalian Commodity Exchange, soybean oil futures fell by 0.86%, while palm oil futures declined by 0.96%. Soybean oil prices on the Chicago Board of Trade dropped by 0.54%. Competition among major vegetable oils continues to influence global price movements.

A slight weakening of the Malaysian currency provided additional support for exports. The ringgit declined by 0.05% against the US dollar, making palm oil marginally cheaper for foreign buyers. Meanwhile, Malaysia lowered its November reference price for crude palm oil while keeping the export duty unchanged at 10%. As a result, export duty conditions remained unchanged, while rising physical shipments continued to support market sentiment.

Future price movements will also be influenced by developments in the energy market, as palm oil is used as a feedstock for biodiesel production. Global crude oil prices declined on Friday, although they remained on track for weekly gains amid uncertainty over Middle Eastern supplies and falling US inventories. Lower crude oil prices may reduce palm oil’s attractiveness as a biofuel feedstock. Nevertheless, the significant recovery in Malaysian exports and strong demand from India remain key factors supporting the palm oil market.

Tags: Malaysia, palm oil