Palm oil prices to remain under pressure amid oversupply — Mistry

Malaysian palm oil futures are likely to remain under pressure as production has stayed above expectations, leading to a buildup in inventories. This was stated by industry analyst Dorab Mistry during a sector conference.

The benchmark March palm oil contract on the Bursa Malaysia Derivatives Exchange (BMD) closed at 4,043 ringgit per metric ton on Friday. In December, prices fell to their lowest level in more than six months, reflecting weak market sentiment.

According to Mistry, palm oil futures on the BMD remain under pressure, while fund investors have exited the market. He noted that this weakness could persist until production shows a clear and sustained decline.

Mistry recalled that in November he had forecast palm oil futures could rise to 5,500 ringgit per ton between January and March if Indonesia stepped up plantation seizures and moved toward implementing a 50% biodiesel blend (B50). However, that bullish scenario has since shifted.

Palm oil output has exceeded expectations by around 1 million tons, inventories have increased, and biofuel demand — particularly in the United States — has disappointed. As a result, palm oil stocks in Malaysia, the world’s second-largest producer, are now expected to exceed 3 million tons, up from earlier forecasts of about 2 million tons.

Tags: prices, palm oil