Palm oil surged and then fell. What changes are hidden behind the battle for the 4470 ringgit mark?
2025-09-17 18:53:46
On Wednesday (September 17), the most-active palm oil contract (FCPOc3) on the Bursa Malaysia Derivatives Exchange (BMD) closed slightly higher, though significantly lower than its intraday high. The December contract closed at 4,474 ringgit per ton, up 4 ringgit, or 0.09%. The price briefly surged to 2.35% during the session, but subsequently narrowed due to the stronger ringgit and weaker demand.
Today's palm oil market exhibited a typical "open high, close low" pattern. Early morning trading saw a rapid surge driven by market sentiment in the external vegetable oil market, but buying momentum weakened in the afternoon. Coupled with the 0.31% strengthening of the ringgit against the US dollar, the purchase cost of dollar-denominated palm oil rose, dampening bullish sentiment. Technically, the daily Bollinger Bands (20, 2) narrowed, the MACD (12, 26, 9) red bars contracted, and the RSI (14) remained in the neutral range, indicating a weakening of short-term momentum.
Demand is clearly diverging . India's palm oil imports hit a one-year high in August, primarily due to its price advantage over soybean oil and concentrated holiday stocking demand. However, purchases have slowed since September, with Indian buyers in particular showing less acceptance of current prices, leading to thin spot market activity. According to data from reputable institutions, Malaysia's palm oil exports from September 1 to 15 increased by only 2.6% month-over-month (Intertek) or slightly decreased by 0.1% (AmSpec), confirming a marginal weakening in demand.
Competitive oil prices are putting pressure on the market. The main soybean oil contract on the Dalian Commodity Exchange fell 0.62%, while the palm oil contract fell 0.63%. Soybean oil prices on the Chicago Board of Trade (CBOT) also fell 1%. The price gap between palm oil and soybean oil has narrowed to a non-favorable range, and some buyers are shifting to South American soybean oil, putting pressure on palm oil destocking.
New Policy Variables : On September 16, the U.S. Environmental Protection Agency (EPA) proposed a plan to reallocate biofuel blending obligations, offering either a 50% or 100% allocation of the previously exempted amount from the Small Refinery Exemption (SRE) program. If a higher allocation is ultimately implemented, it could boost demand for biofuel feedstocks like soybean oil, indirectly impacting palm oil market sentiment. However, the policy will take time to implement, and its short-term impact will be limited.
Anilkumar Bagani, head of research at Sunvin Group in Mumbai, pointed out: "The Malaysian market opened stronger today, mainly due to the linkage of global vegetable oil prices, but weak demand in India and the appreciation of the ringgit have limited the gains." This view directly points to the core contradiction of the current market - the divergence between external market sentiment and local fundamentals.
Other analysts believe that although Malaysia's August inventory data has not been released, the seasonal recovery in production and the slowdown in exports may lead to inventory accumulation. If exports fail to improve significantly in the next two weeks, the probability of price pressure will increase.
In the short term, the palm oil market faces mixed bullish and bearish factors: a strong ringgit exchange rate, weak prices for competing oils, and a temporary slowdown in demand are exerting pressure. However, potential positive biofuel policies and moderate supply growth in producing regions are providing support. Key attention should be paid to India's purchasing pace in late September, Malaysia's production data, and the final EPA policy draft. If demand fails to rebound as expected, prices may continue to fluctuate at high levels. In the medium and long term, macroeconomic sentiment and the progress of global vegetable oil supply and demand rebalancing will need to be carefully monitored.
Market dynamics and capital sentiment
Today's palm oil market exhibited a typical "open high, close low" pattern. Early morning trading saw a rapid surge driven by market sentiment in the external vegetable oil market, but buying momentum weakened in the afternoon. Coupled with the 0.31% strengthening of the ringgit against the US dollar, the purchase cost of dollar-denominated palm oil rose, dampening bullish sentiment. Technically, the daily Bollinger Bands (20, 2) narrowed, the MACD (12, 26, 9) red bars contracted, and the RSI (14) remained in the neutral range, indicating a weakening of short-term momentum.
Analysis of fundamentals and news
Demand is clearly diverging . India's palm oil imports hit a one-year high in August, primarily due to its price advantage over soybean oil and concentrated holiday stocking demand. However, purchases have slowed since September, with Indian buyers in particular showing less acceptance of current prices, leading to thin spot market activity. According to data from reputable institutions, Malaysia's palm oil exports from September 1 to 15 increased by only 2.6% month-over-month (Intertek) or slightly decreased by 0.1% (AmSpec), confirming a marginal weakening in demand.
Competitive oil prices are putting pressure on the market. The main soybean oil contract on the Dalian Commodity Exchange fell 0.62%, while the palm oil contract fell 0.63%. Soybean oil prices on the Chicago Board of Trade (CBOT) also fell 1%. The price gap between palm oil and soybean oil has narrowed to a non-favorable range, and some buyers are shifting to South American soybean oil, putting pressure on palm oil destocking.
New Policy Variables : On September 16, the U.S. Environmental Protection Agency (EPA) proposed a plan to reallocate biofuel blending obligations, offering either a 50% or 100% allocation of the previously exempted amount from the Small Refinery Exemption (SRE) program. If a higher allocation is ultimately implemented, it could boost demand for biofuel feedstocks like soybean oil, indirectly impacting palm oil market sentiment. However, the policy will take time to implement, and its short-term impact will be limited.
Institutional Viewpoint Focus
Anilkumar Bagani, head of research at Sunvin Group in Mumbai, pointed out: "The Malaysian market opened stronger today, mainly due to the linkage of global vegetable oil prices, but weak demand in India and the appreciation of the ringgit have limited the gains." This view directly points to the core contradiction of the current market - the divergence between external market sentiment and local fundamentals.
Other analysts believe that although Malaysia's August inventory data has not been released, the seasonal recovery in production and the slowdown in exports may lead to inventory accumulation. If exports fail to improve significantly in the next two weeks, the probability of price pressure will increase.
Future Outlook
In the short term, the palm oil market faces mixed bullish and bearish factors: a strong ringgit exchange rate, weak prices for competing oils, and a temporary slowdown in demand are exerting pressure. However, potential positive biofuel policies and moderate supply growth in producing regions are providing support. Key attention should be paid to India's purchasing pace in late September, Malaysia's production data, and the final EPA policy draft. If demand fails to rebound as expected, prices may continue to fluctuate at high levels. In the medium and long term, macroeconomic sentiment and the progress of global vegetable oil supply and demand rebalancing will need to be carefully monitored.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
