FX.co ★ Palm OIl Rebounds

Malaysian palm oil futures traded above MYR 4,850 per tonne, rebounding from recent losses on the back of gains in rival edible oil markets. The recovery was further supported by bargain hunting after prices touched a two-week low.

Stronger crude oil prices, driven by escalating hostilities in the Middle East, improved palm oil’s attractiveness as a biodiesel feedstock. At the same time, lingering supply concerns—stemming from unusually dry weather and reduced fertiliser application in Indonesia and Malaysia—continued to pose risks to future output.

However, further upside was tempered by downbeat monthly data from the Malaysian Palm Oil Board. In August, palm oil inventories rose 7.5% to an eight-month high of 2.82 million tonnes, production inched up 1.4% to 1.82 million tonnes, and exports fell 7.5% to 1.29 million tonnes. Early September trade figures were also soft: cargo surveyors reported that exports in the first 10 days of the month were down by 11.7% to 17.5% compared with the same period in August.

Market participants remained cautious ahead of China’s August economic activity data, due later this week, as traders look for fresh demand signals from one of the world’s largest palm oil importers.