On Wednesday (September 10), the most-active palm oil contract on the Bursa Malaysia Derivatives Exchange (BMD) continued its downward trend, with the benchmark November contract closing at 4,413 ringgit per ton, down 66 ringgit, or 1.47%. The price briefly dipped to the lower end of its recent range, putting the technical outlook under pressure.

The market is under pressure from weak foreign oil and fat and export data

Palm oil prices fell for the second consecutive day today, primarily due to dual pressures from external markets. Chicago Board of Trade (CBOT) soybean oil prices fell slightly by 0.2%, while the main soybean oil contract on the Dalian Commodity Exchange fell by 1.92%, and the palm oil contract fell by a whopping 2.39%. The weak performance of these external oils and fats has directly weakened palm oil's short-term competitiveness.

Export data further exacerbated market pessimism. Data from shipping survey agencies Intertek Testing Services and AmSpec Agri Malaysia showed that Malaysia's palm oil product exports fell by 1.2% to 8.4% from September 1 to 10 compared to the same period the previous month. This decline suggests that there has been no clear recovery in demand.

High inventories suppress market sentiment

Data released Wednesday by the Malaysian Palm Oil Board (MPOB) showed that Malaysian palm oil inventories climbed to a 20-month high at the end of August, with production increasing and exports declining slightly. This data is consistent with previous surveys by reputable institutions, reflecting continued accumulation of supply pressures. Despite the gradual end of the seasonal production increase, high inventories continue to exert substantial pressure on prices.

Technical indicators suggest short-term downside risks

From a technical analysis perspective, palm oil prices may retest the low of 4,377 ringgit per ton on August 29. A well-known institutional technical analyst pointed out: "The downward trend that started from 4,614 ringgit may have resumed, and the key support level is facing a test." At present, the MACD indicator is still in the negative range, and the RSI (14) is around 50.5, indicating that the market's bullish and bearish forces are temporarily balanced, but the short-term momentum is weak.

Institutional view: Pay attention to production dynamics and external market linkage

A trader in Kuala Lumpur said: "The decline in palm oil prices was mainly affected by weak Chicago soybean oil prices and poor export data at the beginning of the month. The decline in the Dalian market in early trading today also exacerbated the pressure. The market will subsequently focus on upcoming changes in production data." This view reflects the current market's increasing sensitivity to supply and demand fundamentals.

Future Outlook: Finding Direction Amidst Fluctuations

Despite short-term price pressures, the market remains concerned about weather changes in Southeast Asian producing regions, labor conditions, and the potential impact of Indonesian policy adjustments. Furthermore, fluctuations in the international soybean oil-palm oil price gap will continue to directly impact palm oil's export competitiveness. If the external oil and fat market stabilizes or demand recovers unexpectedly, palm oil prices may still experience temporary support.

The current market logic remains centered around high inventories, weak exports, and a drag from foreign markets. Investors are advised to closely monitor Malaysia's mid-September production forecast and changes in its export pace. Until a clear turning point in fundamentals emerges, the market may continue to fluctuate at a high level, but short-term downside risks have not yet been fully resolved.