Malaysian palm oil futures closed slightly higher on Friday (February 27), with the benchmark May contract rising 35 ringgit to settle at 4,040 ringgit per tonne, a gain of 0.87%. However, looking at the monthly performance, the benchmark contract fell 4.47% in February, marking its largest monthly decline since April 2025. This stark contrast highlights the current struggle between short-term positive factors and medium-term pressures in the palm oil market.



Friday's rebound was primarily driven by external markets. The overnight rise in Chicago soybean oil futures laid a strong foundation for the Malaysian market's opening. Anilkumar Bagani, head of commodities research at Sunvin Group, pointed out that the gap-up opening of Bursa Malaysia crude palm oil futures was directly due to the overnight rise in Chicago soybean oil futures. The steady performance of related commodities on the Dalian Commodity Exchange also provided support; by the close, soybean oil contracts held onto their gains, while palm oil contracts rose slightly by 0.11%.

Continued weakness in export data was the core factor suppressing prices in February. Data released by two major testing agencies showed that Malaysian palm oil exports from February 1st to 25th saw a double-digit decline compared to the previous month: AmSpec Agri Malaysia reported a 16.1% decrease, while Intertek Testing Services reported a 12.1% decrease. Market concerns about demand remained until the full February export data was released. Furthermore, the strong performance of the ringgit further weakened the price competitiveness of Malaysian palm oil in the hands of international buyers. Although the ringgit fell slightly by 0.15% against the US dollar on Friday, it rose 1.3% throughout February, marking its seventh consecutive month of appreciation, which constituted the macroeconomic backdrop suppressing exports.

From the perspective of inter-commodity correlation, palm oil continues to closely follow the fluctuations of related oils. In the global vegetable oil market competition for market share, its price trend is heavily influenced by substitutes such as soybean oil. The significant 1.8% increase in Chicago soybean oil futures overnight was the direct trigger for Friday's rebound. In terms of industry dynamics, First Resources, a well-known palm oil company, disclosed that it has paid the Indonesian government $5.6 million for land transferred to the government. This event reflects the ongoing costs incurred by upstream companies in resource integration and compliance, but its direct impact on short-term supply and demand is not yet significant.

Looking ahead, there is some divergence between short-term technical and fundamental factors. Wang Tao, a well-known technical analyst, believes that palm oil futures may break through the resistance level of 4058 ringgit/ton and further test the 4076-4095 ringgit range. However, for the market to achieve a sustained rebound, it must receive substantial support from improved demand. Currently, traders are closely watching the upcoming February export data and whether there will be a seasonal recovery in production in producing regions. In the absence of clear bullish drivers, changes in inventory pressure will be a key variable determining the trend in March.