Palm oil prices rise on oil, but high stocks in Malaysia hold back further growth

September palm oil futures on Bursa Malaysia rose 1.5% to 4,232 ringgit (about $996/t) on Monday, posting a weekly gain of 4.1%. The main support was the rise in oil prices and expectations of increased exports against the background of reduced import duties in a number of European countries. Also supported was data from a trader survey, which recorded an increase in Malaysian palm oil exports from July 1 to 10 by 5.3-12% compared to the same period in June.

The key news was Malaysia’s conclusion of the MeEPA agreement with the European Free Trade Association countries (Switzerland, Norway, Iceland, Liechtenstein). The document provides for a 20–40% reduction in duties on MSPO-certified palm oil, as well as international recognition of Malaysia’s eco-standard, which guarantees supply chain transparency, no deforestation, and no forced labor.

Despite this positive news, the rise in quotes is limited by data from the Malaysian Palm Oil Board (MPOB): in June, crude palm oil (CPO) production fell by 4.48% to 1.69 million tonnes, while exports fell by 10.52% to 1.26 million tonnes. This led to an increase in total palm oil stocks to 2.03 million tonnes, the highest level in the last 18 months (in May – 1.99 million tonnes).

At the same time, CPO stocks fell by 5.42% to 1.04 million tons, while refined palm oil stocks increased by 12.19% to 988 thousand tons.

Oil prices jumped to a three-week high on Monday on rising geopolitical tensions and expectations of new sanctions against Russia. But Trump’s announcement that he had given Russia another 50 days to make peace caused an immediate pullback in oil prices. This reinforced expectations that the rise in palm oil prices would be temporary and also dampened the prospects for higher prices for sunflower and soybean oils.

Tags: prices, Malaysia, palm oil