Malaysian palm oil futures surged over 1%, reaching levels above MYR 4,090 per tonne, marking a continuous climb for the seventh session. This increase is attributed to the robustness of rival oils on the Dalian Exchange and a weakening ringgit. The contracts are now trading at their highest point in three months.
Recent data from Indonesia, the world's leading palm oil producer, revealed a significant uptick in domestic demand for biodiesel, coinciding with a decline in production. Consequently, inventories plummeted by 10.82% in July compared to June, hitting a five-year low of 2.51 million metric tons.
In Malaysia, seasonal slowdowns and labor shortages are further constraining output, which is bolstering prices. Additionally, news that China, a major consumer, intends to distribute one-time cash handouts in anticipation of a holiday next week has fueled market optimism.
In the energy sector, crude oil prices stabilized after a previous decline, with decreasing stockpiles in the US alleviating some concerns about demand. However, the rally in palm oil prices was tempered by caution ahead of expected shipment estimates from cargo surveyors for the period of St. 1-25.
Since the beginning of 2024, palm oil has increased by 434 MYR/MT or 11.66%, as rorted by trading on a contract for difference (CFD) that reflects the benchmark market for this commodity. Analysts predict that palm oil will trade at approximately 3912.36 MYR/MT by the end of the current quarter, with expectations of a further decline to 3721.82 MYR in the next 12 months.