Malaysian palm oil futures extended their gains to around MYR 4,990 per tonne, the highest level since December 2024. The benchmark contract is also heading for its largest weekly increase in 24 weeks, up nearly 6% so far and logging a third consecutive weekly advance.
The recent rally has been underpinned by strength in Dalian vegetable oil markets and firmer demand from Indonesia, where buyers have accelerated purchases ahead of the full rollout of the B50 biodiesel mandate in October. At the same time, a developing El Niño has heightened concerns about increasing dryness that could constrain production in both Indonesia and Malaysia.
However, further upside remains limited by ample supply, with Malaysian palm oil inventories rising to a five-month high in July. Demand-side risks are also weighing on prices, as Indian refiners are expected to favor cheaper soyoil, with record soyoil imports anticipated in August. In addition, cargo surveyors estimated that Malaysian palm oil shipments for August 1–20 were 5.5%–13.2% lower than in the same period in July, highlighting subdued export momentum.