On Monday (October 27), the palm oil market on the Bursa Malaysia Derivatives Exchange continued its decline, with the benchmark January contract closing down 50 ringgit, or 1.13%, at 4,372 ringgit per ton, its lowest closing level in nearly four weeks. The market fluctuated downward, pressured by weak Liancheng futures and a stronger ringgit. Investors are closely monitoring the impact of weather changes and potential policy developments on the market.

Subtle changes in supply and demand

The palm oil market has recently lacked a clear direction, dragged down by the performance of Liancheng Palm Oil futures and weakened by the 0.36% strengthening of the ringgit against the US dollar, weakening the appeal of Malaysian palm oil to foreign buyers. Data from shipping survey agencies show that Malaysian palm oil exports from October 1 to 25 fell slightly by 0.3%-0.4% compared to the same period in September, suggesting no clear signs of recovery in demand.

According to a Kuala Lumpur trader, "The current market focus is on Liancheng's performance, while also awaiting the impact of weather on production and possible progress in trade negotiations this week." Although soybean oil prices on the Chicago Board of Trade rebounded slightly by 0.77%, this failed to significantly boost sentiment in the palm oil market. It is worth noting that the strengthening of crude oil prices due to improved supply and demand expectations may provide potential support for palm oil demand as a biodiesel feedstock.

Technical analysis and institutional views

Reputable institutional technical analysts have pointed out that palm oil has fallen below the key support level of 4,409 ringgit per ton, with the next target potentially reaching 4,346 ringgit. This assessment echoes the current market weakness. However, some analysts have also stressed that if continued rainfall in major producing areas over the next two weeks impacts harvesting progress, it could lead to an unexpected tightening of supply.

The market is waiting for an opportunity to break through

A confluence of bullish and bearish factors has currently led to a market impasse. Although the US President has hinted at an imminent trade deal with China, the actual impact of the specific terms on the agricultural product market remains to be seen. Capital flows indicate that some institutions are reducing their long positions and adopting a wait-and-see approach. Industry insiders believe the market may remain volatile until November production data becomes available.

In the short term, palm oil prices still require careful attention to three key variables: price fluctuations of related oil varieties in Liancheng, fluctuations in the ringgit exchange rate, and the impact of weather conditions in major producing areas on harvest progress. If these factors converge, the current equilibrium could be disrupted.