Malaysian palm oil futures extended their upward trend for the fourth consecutive session on Thursday, marking their highest close in over a year. The rally was supported by the strength of rival edible oils and robust demand from key buyers, driving the benchmark palm oil contract to its highest closing level since March 3, 2023.
The surge in palm oil prices can be attributed to the robust performance of competing oils and concerns surrounding diminishing reserves in Malaysia, the world’s second-largest palm oil producer. Key importers such as India, China, and the Middle East have shown sustained demand, further boosting market sentiment.
The rise in Dalian’s most-active soyoil contract and palm oil contract, along with increasing soyoil prices on the Chicago Board of Trade, have contributed to the positive momentum in the global vegetable oils market. Palm oil prices are influenced by movements in related oils as they vie for market share.
Malaysia’s palm oil stocks declined to a seven-month low in February, driven by a reduction in production and a slowdown in exports. With inventories falling by 5% to 1.92 million metric tons and crude palm oil production decreasing by 10.18% to 1.26 million tons, the market dynamics have favored higher demand.
In contrast, India experienced a decline in palm oil imports to a nine-month low in February due to elevated prices, prompting buyers to shift towards rival sunflower oil. This shift in demand preferences has influenced trade patterns within the edible oils market.
The uptick in oil prices, supported by strong U.S. demand and supply concerns following geopolitical tensions, has further bolstered palm oil as an attractive option for biodiesel feedstock. The confluence of global factors and market dynamics has propelled Malaysian palm oil to its highest levels, signaling a positive outlook for the industry.