Palm oil rises on Thursday as bargain buying supports the market

Malaysian palm oil futures edged higher on Thursday as bargain buying emerged after recent price declines. The benchmark October contract on the Bursa Malaysia Derivatives Exchange gained 5 ringgit, or 0.11%, to close at 4,606 ringgit ($1,132) per ton. According to traders, prices below 4,600 ringgit per ton encouraged fresh buying interest.

However, gains remained limited by growing palm oil inventories in the world’s two largest producers, Indonesia and Malaysia. Indonesia’s stocks rose nearly 19% in May as exports weakened sharply, while Malaysian inventories climbed to a four-month high in June as production recovered faster than demand.

Additional pressure on the market comes from uncertainty surrounding Indonesia’s B50 biodiesel program and the European Union’s deforestation regulations. Market analysts say these factors continue to limit the upside potential for palm oil prices despite periodic buying interest.

Malaysian palm oil exports during the first half of July are estimated to have increased by 4% to 12.4% compared with the previous month, according to cargo surveyors. Meanwhile, soybean oil and palm oil futures on China’s Dalian Commodity Exchange declined, limiting further gains in the Malaysian market.

Analysts expect palm oil prices to continue trading within the 4,500-4,700 ringgit per ton range in the near term. Reuters’ technical analysis suggests that if the current downtrend is broken, prices could retest the July 9 high of 4,630 ringgit per ton.