Palm oil fell for two consecutive weeks. Can the 4424 ringgit mark maintain the new balance between supply and demand?
2025-09-19 19:09:19
On Friday (September 19), the main palm oil contract (FCPOc3) on the Bursa Malaysia Derivatives Exchange closed at 4,424 ringgit per ton, down 0.25% for the day and 0.47% for the week, marking the second consecutive week of decline. Prices briefly attempted a rebound during the session, but weakened Chicago soybean oil futures and crude oil market sentiment dragged them down, ultimately closing lower.
The palm oil market has recently been plagued by mixed bullish and bearish factors, but new dynamics are gradually emerging. On the one hand, the Malaysian Palm Oil Board (MPOB) announced an increase in the October reference price for crude palm oil while maintaining the export tariff at 10%, a move that may dampen short-term export enthusiasm. On the other hand, data from shipping research firm ITS shows that Malaysian palm oil product exports increased by 2.6% month-on-month from September 1 to 15. However, data from independent inspection firm AmSpec Agri Malaysia for the same period shows a slight decrease of 0.1%, reflecting growing market divergence.
The latest forecast from Brazilian agricultural agency Conab indicates that soybean production in the new season is expected to reach nearly 178 million tons, a record high. The expected bumper soybean harvest in South America continues to suppress global vegetable oil market sentiment, placing particular pressure on soybean oil prices in the medium and long term, indirectly curbing the upward potential of palm oil.
Chicago Board of Trade (CBOT) soybean oil contracts fell 0.31% on the day, mirroring the trend of palm oil. As a key competitive commodity in the global vegetable oil market, soybean oil price fluctuations directly impact demand for palm oil alternatives. Furthermore, lower international crude oil prices on Friday weakened the economic appeal of palm oil as a biodiesel feedstock, further dampening market sentiment.
The Malaysian ringgit depreciated 0.24% against the US dollar that day, theoretically boosting the competitiveness of palm oil exports. However, this positive development failed to offset the underlying pressures. One analyst noted, "A weak ringgit typically supports palm oil prices, but the current market focus is on whether demand can sustainably absorb supply pressures."
Analysts at prominent institutions believe the palm oil market will remain volatile in the short term. A senior oils and fats analyst stated, "While the weakening ringgit is providing some support, the weakness in the soybean oil market and expectations of increased soybean production in Brazil remain the main suppressive factors. If export data fails to continue to improve, prices may further test support levels."
Technically, the middle Bollinger Band for the main palm oil contract is near 4,463 ringgit on a daily basis. While the MACD indicator is above zero, its momentum is weakening, suggesting a possible continuation of the short-term correction. However, some believe that a rebound in the crude oil market following the Federal Reserve's interest rate adjustments could rekindle demand for palm oil biodiesel.
While current market sentiment is bearish, caution is warranted regarding potential turning points. Malaysia's stable export tariff policy will help mitigate short-term supply fluctuations. Furthermore, if demand exceeds expectations during the traditional peak consumption period in the fourth quarter, this could provide momentum for a price rebound. In the long term, the global vegetable oil supply and demand balance will continue to hinge on the production policies of major producing countries and the interplay between them and the energy market.
Overall, the palm oil market is in the midst of a recalibration of bullish and bearish forces. Traders should closely monitor the overall impact of weather conditions in Southeast Asian producing areas, changes in export data, and macroeconomic policies on the commodity market, rather than simply focusing on short-term price fluctuations.
The supply and demand pattern has quietly changed
The palm oil market has recently been plagued by mixed bullish and bearish factors, but new dynamics are gradually emerging. On the one hand, the Malaysian Palm Oil Board (MPOB) announced an increase in the October reference price for crude palm oil while maintaining the export tariff at 10%, a move that may dampen short-term export enthusiasm. On the other hand, data from shipping research firm ITS shows that Malaysian palm oil product exports increased by 2.6% month-on-month from September 1 to 15. However, data from independent inspection firm AmSpec Agri Malaysia for the same period shows a slight decrease of 0.1%, reflecting growing market divergence.
The latest forecast from Brazilian agricultural agency Conab indicates that soybean production in the new season is expected to reach nearly 178 million tons, a record high. The expected bumper soybean harvest in South America continues to suppress global vegetable oil market sentiment, placing particular pressure on soybean oil prices in the medium and long term, indirectly curbing the upward potential of palm oil.
External market linkage and currency effects
Chicago Board of Trade (CBOT) soybean oil contracts fell 0.31% on the day, mirroring the trend of palm oil. As a key competitive commodity in the global vegetable oil market, soybean oil price fluctuations directly impact demand for palm oil alternatives. Furthermore, lower international crude oil prices on Friday weakened the economic appeal of palm oil as a biodiesel feedstock, further dampening market sentiment.
The Malaysian ringgit depreciated 0.24% against the US dollar that day, theoretically boosting the competitiveness of palm oil exports. However, this positive development failed to offset the underlying pressures. One analyst noted, "A weak ringgit typically supports palm oil prices, but the current market focus is on whether demand can sustainably absorb supply pressures."
Institutional Views: Finding Direction Amidst Divergence
Analysts at prominent institutions believe the palm oil market will remain volatile in the short term. A senior oils and fats analyst stated, "While the weakening ringgit is providing some support, the weakness in the soybean oil market and expectations of increased soybean production in Brazil remain the main suppressive factors. If export data fails to continue to improve, prices may further test support levels."
Technically, the middle Bollinger Band for the main palm oil contract is near 4,463 ringgit on a daily basis. While the MACD indicator is above zero, its momentum is weakening, suggesting a possible continuation of the short-term correction. However, some believe that a rebound in the crude oil market following the Federal Reserve's interest rate adjustments could rekindle demand for palm oil biodiesel.
Future Outlook: Focus on the Resonance between Policy and Demand
While current market sentiment is bearish, caution is warranted regarding potential turning points. Malaysia's stable export tariff policy will help mitigate short-term supply fluctuations. Furthermore, if demand exceeds expectations during the traditional peak consumption period in the fourth quarter, this could provide momentum for a price rebound. In the long term, the global vegetable oil supply and demand balance will continue to hinge on the production policies of major producing countries and the interplay between them and the energy market.
Overall, the palm oil market is in the midst of a recalibration of bullish and bearish forces. Traders should closely monitor the overall impact of weather conditions in Southeast Asian producing areas, changes in export data, and macroeconomic policies on the commodity market, rather than simply focusing on short-term price fluctuations.
- 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.
