Malaysian palm oil futures closed higher on Friday, ending a four-day losing streak, but are on track for their second consecutive weekly decline. The benchmark contract showed resilience near a key psychological level, with market sentiment tug-of-war between demand concerns and bargain hunting.



The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange rose 13 ringgit to 4,050 ringgit per tonne (about US$910.64) by the close of trading on Friday. The contract traded between 4,016 and 4,068 ringgit during the session. So far this week, the contract has fallen 2.3%.

The price reversal was primarily driven by short covering activity before the weekend. Kenanga Futures noted in a report, "Bargain buying following the recent price decline has limited the market's downside to some extent." The firm also emphasized that demand uncertainty in the coming months due to the strengthening ringgit remains a key factor suppressing market sentiment. A Kuala Lumpur trader stated, "The market is following the weakness in the Dalian vegetable oil market, coupled with sluggish spot demand, which together constitute the current market pattern."

In external markets, the most active soybean oil contract on the Dalian Commodity Exchange fell 0.86%, while its palm oil contract declined 1.54%; soybean oil prices on the Chicago Board of Trade also fell 0.33%. As a benchmark commodity in the global vegetable oil market, palm oil continues to be influenced by the price trends of related vegetable oils. It is worth noting that the Chinese market will be closed from February 16th to 23rd for the Lunar New Year holiday.

On the macroeconomic policy front, Malaysia has raised its March crude palm oil reference price while maintaining its 9% export tax rate. This policy combination will impact export competitiveness to some extent. Meanwhile, industry attention is shifting to policy developments in major producing countries.

Julian McGill, Managing Director of Glenauk Economics, a well-known industry consulting firm, revealed that although the land acquisition measures taken by the Indonesian government's forestry task force have caused some disruption, the country's 2025 oil palm seed sales data suggests that planting activity remains at a considerable scale. However, analysts generally believe that Indonesia's suspension of its biodiesel capacity expansion plan and the expected production growth in the coming months may put downward pressure on prices; but strong demand and a slowdown in total output growth are expected to limit the downside for prices.

In the short term, market focus will be on the upcoming export data to verify whether there have been substantial changes in demand. Meanwhile, the ringgit's exchange rate will continue to influence the purchasing intentions of international buyers denominated in US dollars. Considering the holiday season in China, a major importer, trade flows may experience a seasonal slowdown in the next two weeks, potentially providing a window for the market to reassess the supply-demand balance.