On Friday (July 4), the main Malaysian palm oil contract FCPOC3 closed at 4062 ringgit/ton, down 0.71% on the day, but still recorded a weekly increase of 1.27%, achieving the seventh weekly positive close in eight weeks. Technical indicators show short-term overbought pressure: after the upper track of the Bollinger Band (20,2) touched 4187 ringgit, the price fell back to the middle track of 4002 ringgit; although MACD (12,26,9) maintained a golden cross, the column converged to 3.99, suggesting that the upward momentum was weakened.

Long-short game: the drag from the external market and the struggle between fundamental support

The intraday decline was mainly driven by three factors: First, the Chicago Board of Trade (CBOT) soybean oil contract fell 0.96% in a single day, and the main soybean oil contract of the Dalian Commodity Exchange weakened 0.95% simultaneously, suppressing the price advantage of palm oil; second, crude oil prices fell slightly due to OPEC+ production increase expectations, weakening the attractiveness of biodiesel demand; third, the ringgit exchange rate against the US dollar rose slightly by 0.05%, raising import costs and triggering some long profit-taking. David Ng, a senior trader at Kuala Lumpur trading agency Iceberg X, pointed out: "The accumulated profits from the recent rally need to be released, but the extent of the correction is limited by the emergence of an inventory inflection point."

Inventory inflection point appears, supply-side story is not over yet

According to a survey by a well-known institution, Malaysia's palm oil inventory in June is expected to drop by 2.3% month-on-month, ending the trend of three consecutive months of accumulation. This change exceeded market expectations, mainly because the output fell by 3.1% month-on-month due to seasonal weather disturbances, while the export volume remained resilient due to the demand recovery after Ramadan. It is worth noting that the latest data from the Solvent Extractors Association of India (SEA) showed that the country's palm oil imports in June increased by 8% year-on-year, reflecting the replenishment of stocks by price-sensitive buyers.

Institutional view: Short-term fluctuations do not change the medium- and long-term logic

VegOil Insights, a Singapore-based vegetable oil analysis company, believes: "Current prices have partially reflected expectations of production cuts, but the potential impact of El Niño on production in the fourth quarter of 2025 has not yet been fully priced in. If precipitation continues to be low during the critical growing period in August, yield losses may be magnified." The agency raised its average price forecast for 2025 to a range of 3,950-4,200 ringgit.

The head of agricultural product research at Rabobank emphasized marginal changes: "Although the soybean-palm oil price gap has narrowed to $120/ton, the freight advantage of Southeast Asian palm oil over South American soybean oil is still supporting exports. After China's third quarter catering consumption peak season stocking starts, ship purchase data deserves special attention."

Technical aspects and capital flows suggest that the game is escalating

From the perspective of position structure, as of July 3, the speculative net long position of BMD palm oil contract increased by 7.2% compared with the previous week, but the commercial short hedging increased by 4.8%, reflecting the divergence between the industry and financial capital on the price center. The technical support focuses on the 3950-4000 ringgit platform. If it falls below, it may trigger programmatic trading selling; the upward trend needs to break through the previous high of 4186 ringgit to open up new space.