Palm oil prices rise on Monday amid Middle East tensions

Malaysian palm oil prices recovered on Monday after recent losses, climbing back above MYR 4,500/t. The market was supported by stronger vegetable oil prices in China and the US, firmer crude oil prices amid renewed tensions in the Middle East, and a weaker Malaysian ringgit.

Stronger export demand also provided support. According to cargo surveyors, Malaysian palm oil shipments during July 1–10 increased by 1.6%–5.1% compared with the same period in June. Meanwhile, Indonesia plans to raise its mandatory biodiesel blend from B40 to B50, which is expected to increase domestic palm oil consumption to 16.3–17 mln tons this year from 15.2 mln tons last year.

However, further price gains are being limited by rising inventories in Malaysia. Data from the Malaysian Palm Oil Board (MPOB) showed that June stocks increased by 4.8% from the previous month to the highest level in four months, while production rose 8.1% due to seasonal output growth.

Additional pressure comes from India, the world’s largest palm oil importer. Imports fell to a 14-month low in June as demand weakened and palm oil lost part of its price advantage over competing vegetable oils.

Traders are also closely watching China’s June trade figures and second-quarter GDP data, which could significantly influence demand expectations from one of the world’s largest palm oil buyers.

Tags: prices, palm oil