Palm oil prices on the Bursa Malaysia Derivatives Exchange (MBDE) fell again on Friday (October 24th). The main January contract closed at 4,420 ringgit per ton, a single-day drop of 51 ringgit, or 1.14%. The weekly decline widened to 2.06%, marking the second consecutive week of declines. The current price range continues to fluctuate between 4,400 and 4,500 ringgit, with the market in a wait-and-see mode.

The supply and demand balance is tilted towards the negative

Local traders in Kuala Lumpur noted that the market is searching for new drivers and currently lacks clear direction. Looking at the performance of related markets, the main soybean oil contract on the Dalian Commodity Exchange fell slightly by 0.15%, while the palm oil contract rose slightly by 0.09%, but overall momentum was limited. Soybean oil prices on the Chicago Board of Trade fell by 0.35%, indicating overall pressure on the global vegetable oil market.

In the crude oil market, despite supply concerns that had driven prices higher in the previous session due to new US sanctions on two major Russian oil companies, prices stabilized on Friday. Crude oil trends have a direct impact on demand for palm oil biodiesel. When crude oil weakens, the economic viability of palm oil as a biodiesel feedstock decreases significantly.

Monetary factors provide support

Notably, the ringgit strengthened 0.14% against the US dollar to close at 4.2240. While currency appreciation typically weakens the competitiveness of Malaysian palm oil exports, this exchange rate fluctuation did not reverse the price decline, reflecting the core market contradictions remaining centered on fundamentals.

Institutional perspectives focus on key factors

Citing an analysis by AmInvestment Bank, a leading research firm noted that the current market faces multiple pressures: weak crude oil prices are weakening the appeal of biodiesel, high vegetable oil inventories in major consumer markets are dampening import demand, and rising global soybean inventories are further squeezing palm oil's market share. The firm emphasized that these combined factors are likely to keep market sentiment cautious.

Technical analysis and capital flows

Looking at the current market position structure, the current price range has been oscillating for nearly two weeks. The 4,400 ringgit mark provides short-term support, while the 4,500 ringgit mark presents significant resistance. A breakout of this range is needed to establish a new trend. Despite two consecutive negative weekly candles, the monthly chart maintains a slight upward trend, indicating that the medium- to long-term trend has not yet fully turned bearish.

Market Outlook

Analysts believe the market is about to enter a traditional seasonal cycle. If production data in the coming weeks shows a decline as expected while exports remain stable, inventory pressures are expected to ease. However, uncertainty in the global macroeconomic environment remains the biggest variable, and investors should closely monitor changes in purchasing policies in major consuming countries and crude oil market dynamics.

In the short term, the market will continue to seek balance in the 4,400-4,500 ringgit range, and any breakthrough will require new fundamental drivers. Institutions recommend focusing on the upcoming production data from the Malaysian Palm Oil Association (MPOA) and export statistics from shipping survey agencies, as these data may become key catalysts to break the current deadlock.