FX.co ★ Palm Oil Set for Third Straight Weekly Decline

Malaysian palm oil futures slipped, trading just below MYR 4,900 per tonne and extending their recent downturn, following bearish monthly data from the Malaysian Palm Oil Board. In August, inventories climbed 7.48% month-on-month to an eight-month high of 2.82 million tonnes, while exports declined 7.5% to 1.29 million tonnes. Production also increased, rising 1.39% to 1.82 million tonnes, reinforcing concerns about abundant supply.

Early September shipments remained subdued, with cargo surveyors indicating that palm oil exports fell by 11.7%–17.5% in the first 10 days of the month compared with the same period in August. However, the downside was limited by stronger crude oil prices, as Brent crude moved above US$100 a barrel amid heightened uncertainty in the Middle East, enhancing palm oil’s attractiveness as a biodiesel feedstock.

Additional support came from unusually dry conditions and reduced rainfall in Indonesia and Malaysia over the past six weeks, compounded by lower fertiliser usage. Even so, palm oil contracts are on track for a third consecutive weekly loss, currently down about 0.9%.