Palm Oil Slides To Six-Week Low Amid Soybean Oil Pressure

Palm oil fell to its lowest level in six weeks, heading for its biggest one-day drop since March, as soybean oil prices declined following Argentina’s temporary removal of export tariffs on all its crop cargoes.

Soybean oil, a close substitute for palm oil in both food and fuel, slipped for a fifth consecutive day in Chicago, adding pressure to US soybean prices already burdened by weak demand from China.

The measure, introduced by Argentine President Javier Milei, aims to attract dollars ahead of the country’s midterm elections and will remain in effect until 31 October or until farmers sell US$7 billion worth of exports.

“The announcement triggered a massive selloff in both Chicago and Dalian vegetable oil markets, putting pressure on palm oil as well,” said Paramalingam Supramaniam, director at brokerage Pelindung Bestari Sdn. Soybean oil reached its lowest intraday level since June, while cooking oil prices on the Dalian Commodity Exchange also fell sharply.

In Kuala Lumpur, palm oil for December delivery on Bursa Malaysia Derivatives declined 3.7% to 4,281 ringgit per tonne at the midday break, marking a year-to-date drop of 3.8%. Refined palm oil for January delivery on the Dalian Commodity Exchange fell 4.2% to 8,964 yuan per tonne, with soybean oil down 4% to 8,034 yuan per tonne.

Soybean oil’s premium over palm currently stands at around US$59 per tonne, above the one-year average of US$43, while palm’s premium over gasoil is approximately US$334 per tonne, compared with an average of US$324 over the past year, according to Bloomberg data.

Market watchers cited ongoing supply concerns, alongside Indonesia’s August palm oil export rise of 3.02% month-on-month and expanded domestic food aid packages including cooking oil, as factors influencing price fluctuations. Malaysia’s palm oil exports from 1–20 September amounted to 941,984 tonnes, according to AmSpec, with the Malaysian Palm Oil Council projecting prices between 4,200 and 4,500 ringgit per tonne in the coming weeks.

Tags: demand, China, soybean oil, prices, palm oil