FX.co ★ Palm Oil Eases on Weak Demand, Heavy Supply

Malaysian palm oil futures hovered just below MYR 4,950 per tonne, pausing their recent rally as weakness in other edible oils on the Dalian and Chicago exchanges dampened sentiment. The market also came under pressure from soft export performance, with cargo surveyor data indicating that Malaysian palm oil shipments in August fell by between 6.5% and 14.9% from the previous month.

Supply-side concerns persisted as well, with domestic inventories climbing to a five-month high in July. On the demand front, EU palm oil imports for the 2026/27 season, which began in July, slumped 21% year-on-year, signalling softer appetite from a key export destination.

Indian demand may also face headwinds, as refiners increasingly turn to cheaper soyoil, although expectations for strong vegetable oil imports in August could lend some support to palm oil. Downside pressure was partially offset by a weaker ringgit, which makes Malaysian palm oil more competitively priced for overseas buyers.

Firmer crude oil prices contributed additional support amid mounting concerns over potential supply disruptions. At the same time, intensifying El Niño risks have heightened worries about drier weather and the possibility of production losses across major producing regions in Southeast Asia.