FX.co ★ Palm Oil Rallies on Tighter Supply, Firm India Demand

Malaysian palm oil futures climbed more than 2.5% to around MYR 5,015 per tonne, extending their recent rally as trade resumed following a holiday. Sentiment was supported by a weaker ringgit and expectations of tighter supplies, with Indonesia’s B50 biodiesel mandate poised to channel more palm oil toward domestic consumption and El Niño risks weighing on production prospects in both Indonesia and Malaysia.

Crude oil prices holding above USD 100 per barrel further enhanced palm oil’s attractiveness as a biodiesel feedstock. In India, the world’s largest palm oil importer, August arrivals rose 7% month-on-month to 782,761 tonnes, the highest level since February, as refiners rebuilt inventories ahead of the peak festival season from August through November.

Meanwhile, Malaysia raised its October crude palm oil reference price, maintaining the export duty at 10%. Still, weaker export performance capped further gains, with cargo surveyors estimating that shipments in the first half of September fell by 17.8%–25.6% compared with the same period in August.