Palm oil futures continued their winning streak, marking a fourth consecutive session of gains as declining stock levels and an improving demand outlook fuelled bullish market sentiment. Investors are closely watching production patterns and global edible oil trends as prices maintain upward momentum.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange closed at 4,595 ringgit ($1,028.65) per metric ton, rising by 91 ringgit or 2.02%. This surge followed data from the Malaysian Palm Oil Board (MPOB), which reported that Malaysia’s palm oil stocks had dropped more than expected in January, reaching their lowest level in 21 months. Despite falling exports and rising imports, production declines have tightened supply, adding pressure to end stocks should demand gain traction in the coming months.
According to Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari, the MPOB data signalled a bullish outlook, with demand trends in February and March set to influence stock levels further. He also highlighted the adverse impact of rainfall in East Malaysia on production, indicating that prices will likely remain firm as supply constraints persist.
Broader market movements reinforced the positive trend in palm oil. On China’s Dalian Commodity Exchange, the most-active soyoil contract inched up 0.15%, while palm oil futures advanced by 1.87%. In contrast, soyoil prices on the Chicago Board of Trade edged down 0.2%. Given that palm oil competes with other vegetable oils in the global market, its price trajectory often follows movements in rival edible oils.
Malaysian palm oil exports presented mixed signals. Cargo surveyor Intertek Testing Services reported a 3.9% decline in shipments during February 1-10 compared to the previous month, while AmSpec Agri Malaysia estimated a 6.4% increase over the same period. These figures highlight the ongoing volatility in trade flows.
Additionally, oil prices rebounded after a decline last week, driven by concerns over a potential global trade war. The rise in crude oil prices enhances palm oil’s appeal as a biodiesel feedstock, further supporting its price strength. Meanwhile, the ringgit weakened by 0.68% against the US dollar, making palm oil more attractive to foreign buyers due to lower relative costs.
As investors continue to monitor supply and demand dynamics, production trends and external market influences will play a crucial role in determining palm oil prices. With stocks tightening and demand poised to strengthen, the market remains positioned for further upside.
Dekel Agri-Vision PLC (LON:DKL) aspires to become a leading agro-industrial company in West Africa, one that creates value for shareholders whilst at all times placing the interests of the local communities and environment in which it operates in at the heart of its operations.
