Malaysian crude palm oil futures, the benchmark contract on the Bursa Malaysia Derivatives Exchange, fell for the third consecutive trading day on Tuesday (February 24), with market sentiment pressured by both shrinking export demand and a strong local currency. At the midday break, the most active May contract, FCPOc3, closed at 4,054 ringgit per tonne, down 29 ringgit, or 0.71%, with trading remaining near recent lows.



“The market is waiting for new drivers, and there is currently a lack of substantial news that can change the landscape,” Paramalingam Supramaniam, director of Selangor brokerage firm Pelindung Bestari, told reporters. He pointed out that the core pressure on the market is clear: the continued strengthening of the ringgit is suppressing export competitiveness, while the latest export data released by shipping survey agencies directly confirms the weak demand.

According to statistics from well-known organizations Intertek Testing Services and AmSpec Agri Malaysia, from February 1st to 20th, Malaysian palm oil product exports fell by 8.9% to 12.6% month-on-month, a further widening of the decline compared to the first half of the month. This data directly shook market expectations for pre-Ramadan stockpiling – a period typically sees concentrated purchases from the Middle East and South Asia during this time of year.

In terms of exchange rates, although the ringgit depreciated slightly by 0.05% against the US dollar during the day, it remains near its strongest level since April 2018. For palm oil priced in ringgit, the appreciation of the local currency has objectively weakened the purchasing willingness of overseas buyers, especially in price-sensitive markets such as India, where buyers are more inclined to wait and see or turn to more cost-effective alternatives.

However, the Malaysian Palm Oil Council (MPOC) released its monthly outlook on Tuesday, predicting that crude palm oil prices will trade between 4,000 and 4,300 ringgit per tonne in March. The council's supporting logic is quite clear: supply is tightening, demand from major buyer India is expected to recover, and US soybean oil prices remain firm; these factors will collectively form a price floor. Notably, the council specifically emphasized the potential for increased demand in the Indian market—as refining margins improve in the country, restocking demand may gradually be released before Ramadan.

The external vegetable oil market showed mixed performance on Tuesday. The most active soybean oil contract on the Dalian Commodity Exchange rose 0.97%, while the most active palm oil contract also climbed 0.85%, indicating a temporary recovery in the Chinese market. Soybean oil futures on the Chicago Board of Trade, however, closed essentially flat. Looking at the price spread structure, the discount of palm oil to soybean oil continues to attract bargain hunters, which may be one of the few positive signals for Malaysian exporters.

A Singaporean trader told reporters that the market is currently in a phase of expectation restructuring: "Export data confirms the true state of demand, but the MPOC's forecast for March offers a relatively optimistic outlook. This contradiction reflects the market's search for a new balance—both digesting short-term negative factors and repricing for Ramadan."

From a technical perspective, the most active palm oil contract has fallen by approximately 1.8% over the past three trading days, while open interest has increased slightly, indicating that short sellers are still dominating the short-term trend. However, it's worth noting that some buying interest emerged near the 4050 ringgit/ton level, a position that coincides with a high-volume trading area in mid-February. If export data fails to improve in the coming days, the market may continue to test lower support levels.

Looking ahead, traders are generally focusing on three aspects: first, the export data for February to be released at the end of the month by shipping survey agencies to verify whether Ramadan stockpiling has truly begun; second, further developments in Indonesia's biodiesel policy; and third, the transmission effect of crude oil price fluctuations on the benefits of biodiesel blending. In the absence of clear driving factors, palm oil may continue to follow the trend of related vegetable oil markets in the short term, awaiting clearer signals from the fundamentals.