FX.co ★ Palm Oil Extends Gains

Malaysian palm oil futures experienced a slight increase on Thursday, stabilizing around MYR 4,040 per tonne, marking the second consecutive day of upward movement. This trend was supported by a weakening U.S. dollar and rising prices of competing edible oils in the Dalian and Chicago markets, as well as predictions of heightened demand leading up to the Lunar New Year and Ramadan celebrations in February. In Indonesia, the leading palm oil producer, the government intends to reclaim an additional 4–5 million hectares of palm oil plantations, building upon the 4.1 million hectares already appropriated last year. Analysts caution that this action, combined with Indonesia’s aggressive biodiesel expansion efforts, could restrict supplies and drive prices higher. Nevertheless, gains were somewhat capped due to reduced demand from India, the largest global importer of palm oil, following an eight-month low in December imports as a result of subdued winter consumption and increased usage of alternative oils. Concurrently, Reuters' projections indicated that Malaysia's inventories reached their highest point in nearly seven years as of December, while concerns over potential deflation risks persisted in anticipation of the forthcoming CPI and PPI data release on Friday in China, a major consumer.