On Monday (February 16), palm oil futures on the Malaysian Derivatives Exchange continued their downward trend, with the benchmark May contract closing down 32 ringgit at 4,014 ringgit per tonne, a decrease of 0.79%. Trading was generally light throughout the session, with prices briefly dipping below the 4,000 ringgit mark. Market participants pointed out that weak export data coupled with expectations of faster harvest progress in producing regions were the main factors suppressing prices.

Exports declined further in the first half of February, and Indian purchases failed to provide support.

Data released by a well-known shipping survey agency shows that Malaysian palm oil product exports declined by 11.2% to 14.9% week-on-week from February 1st to 15th. This decline widened compared to the previous week, reflecting a cooling of purchasing intentions in major demand countries. Notably, Indian buyers, who were previously expected to be active in the market, did not make significant inroads. The head of commodity research at Mumbai-based brokerage Sunvin Group pointed out that apart from sporadic purchases in the Indian market, major destination markets generally maintained a wait-and-see attitude. This means that pre-Ramadan stockpiling demand has not yet been fully reflected in trade data, and whether this can improve will directly impact market trends.

The accelerated harvesting pace in production areas has led to short-term supply pressure.

Besides weak demand, changes on the supply side are also drawing traders' attention. The aforementioned research director further stated that the market expects producing regions to enter their peak harvest season earlier than usual before Ramadan, meaning that the available supply may increase in the short term. This assessment is based on seasonal patterns and the unique nature of this year's agricultural rhythm—if the harvest progress is indeed faster than in previous years, supply pressure may become more apparent from late February to early March. Looking at the market performance, although the previous trading day closed slightly higher, prices weakened again on Monday, indicating that supply expectations are translating into actual selling pressure.

The external environment is unfavorable, with both exchange rates and crude oil prices exerting downward pressure.

From an external market perspective, two major factors are also putting downward pressure on palm oil. Firstly, the Malaysian ringgit appreciated slightly by 0.18% against the US dollar on Monday, making ringgit-denominated palm oil more expensive for buyers holding US dollars, objectively suppressing purchasing intentions. Secondly, international crude oil futures prices remained weak and volatile. The market is weighing the progress of US-Iran negotiations against the potential increase in OPEC+ production; if oil prices continue to be under pressure, the attractiveness of palm oil as a biodiesel feedstock will further diminish.

Holiday factors disrupt trading; guidance for market reopening next week

It's worth noting that several major global markets are on holiday this week. The Dalian Commodity Exchange (DCE) will be closed from Tuesday for the Lunar New Year holiday until February 24th; the Chicago Mercantile Exchange (CME) will also be closed on Monday. The Bursa Malaysia Derivatives Exchange (BMD) will also be closed on Tuesday and Wednesday. This means that there will be a lack of significant price guidance signals from external markets for the next two trading days. When markets reopen after the holidays, international crude oil price movements, the Malaysian Ringgit exchange rate, and restocking demand in the Chinese market will be the focus of attention.

From the current market perspective, palm oil is facing a double whammy of cooling demand and supply expectations. The weak export data in the first half of February is not an isolated incident; if this trend continues in the month-end data, it means the Ramadan stockpiling logic has been disproven. On the other hand, whether the harvest pace in producing regions has truly accelerated as expected remains to be seen and will require verification from subsequent production data. In the short term, the market will be in a news vacuum, and the direction chosen by funds returning after the holidays will be crucial. If crude oil prices fail to provide effective support and export data remains weak, the market may further test lower support levels.