FX.co ★ Palm Oil Rallies on Supply Concerns, Eyes Second Weekly Gain

Malaysian palm oil futures jumped more than 3% to above MYR 4,750 per tonne, erasing earlier losses and reaching a three-week high. The rally was underpinned by stronger prices for edible oils on China’s Dalian exchange and the Chicago markets, which lifted overall sentiment, as well as mounting supply concerns in top producer Indonesia.

The Indonesian Palm Oil Association expects national output to decline to 51.7 million tonnes in 2027 from 53.7 million tonnes this year, while exports are projected to fall by nearly 15% year-on-year, driven by rising domestic demand for biodiesel and food.

At the same time, Malaysian export data signaled firmer near-term demand. Cargo surveyors reported that shipments from Malaysia surged by 33.5%–37.7% in October 1–10 compared with the same period in September. Strong festival-related buying from India, the world’s largest palm oil importer, provided additional price support.

Gains were partly capped, however, by record-high Malaysian inventories and increased caution ahead of next week’s release of China’s Q3 GDP data, given China’s role as a major palm oil consumer. For the week, Malaysian palm oil futures were on course for a second consecutive weekly rise, gaining about 3.9% so far.