On Thursday (September 11), the main palm oil contract FCPOc3 on the Bursa Malaysia Derivatives Exchange (BMD) ended its two-day decline and closed at 4,453 ringgit/ton, up 40 ringgit or 0.91% on the day. Intraday technical indicators showed that the RSI (14) was at 53.83 and the MACD was still in the negative range, suggesting that although the market rebounded in the short term, the momentum has not yet fully strengthened.

Supply-side contradictions are highlighted: production expectations are met

Although data from the Malaysian Palm Oil Board (MPOB) showed inventories climbing to a 20-month high at the end of August, market attention is shifting to production falling short of expectations. Paramalingam Supramaniam, director of Pelindung Bestari, a brokerage firm in Selangor, noted, "The market had generally expected a significant increase in production in the third quarter, but the actual data did not support this." Between July and August, Malaysia's palm oil production fell 1.87% year-on-year, easing supply pressures more than expected.

Export demand continues to be weak

Demand remains the biggest drag on the market. Data from shipping research firms Intertek Testing Services and AmSpec Agri Malaysia show that Malaysia's palm oil exports fell 1.2% month-over-month to 8.4% from September 1st to 10th. Supramaniam admitted, "The market is still searching for demand support, which is the primary headwind at the moment." Although soybean oil prices on the Chicago Board of Trade (CBOT) rose 0.55% and the main soybean oil contract on the Dalian Commodity Exchange also saw a slight increase of 0.17%, the combined palm oil contract still fell 0.11%, reflecting the weak demand for palm oil itself.

Technical analysis and capital sentiment

From a technical perspective, the palm oil contract's key support level is 4,381 ringgit per ton. A break below this could lead to further declines to 4,343 ringgit. While prices are currently finding support, the MACD indicator's double lines remain below the zero axis, indicating that the medium- to long-term trend remains unclear. Some traders believe the current rebound is more due to short-covering than a substantial improvement in fundamentals.

Institutional Views: Finding Direction Amidst Divergence

Analysts from prominent institutions emphasize that palm oil price trends still require careful consideration of the impact of competing oils and fats. While strength in Chicago soybean oil provides some support for palm oil's relative value, weak demand continues to constrain upward momentum. Supramaniam further adds, "If export data fails to improve in the coming weeks, inventory pressures could once again dominate market sentiment."

The current palm oil market is plagued by mixed bullish and bearish factors: Lower-than-expected production on the supply side provides short-term support, but weak demand and high inventories remain key constraints. Close attention should be paid to weather changes in Southeast Asian producing areas, export data, and the price dynamics of competing oils and fats. The market is likely to remain volatile until a new driver emerges to disrupt the equilibrium.