Malaysian palm oil futures fall on weak export demand

Benchmark contract closes 1.35% lower

Malaysian palm oil futures fell more than 1% on Monday, pressured by sluggish demand in key buying markets at a time of rising output, UkrAgroConsult reported. The benchmark FCPO1 contract for July delivery on the Bursa Malaysia Derivatives Exchange dropped 62 ringgit, or 1.35%, to close at 4,535 ringgit (US$1,148.10) per metric tonne. The contract had gained 0.39% in the previous session.

The move was driven by softer export figures alongside expectations of higher production in April, according to Anilkumar Bagani, head of commodity research at Mumbai-based brokerage Sunvin Group. "Buying in target countries has been very weak, with the exception of some purchases from China last week, but this has failed to support palm oil prices in the long term," he said.

Exports drop by up to 17%

Cargo surveyor AmSpec Agri Malaysia reported that Malaysia's palm oil exports fell 17% from the previous month between April 1 and 25. Other cargo experts cited by UkrAgroConsult put the decline at 15.7-16.8% over the same period. The drop in shipments underlines how thin demand has been across most destinations, with the exception of scattered Chinese buying.

Palm oil tracks competing vegetable oils as it fights for share in the global edible oil market. The active Dalian soybean oil contract fell 0.45%, while the Dalian CPO1 palm oil contract slipped 0.05%. Soybean oil on the Chicago Board of Trade edged up 0.04%.

Energy and currency pull in opposite directions

Not all signals point lower. Crude oil prices jumped nearly 3% as peace talks between the United States and Iran stalled and shipments through the Strait of Hormuz remained limited, tightening global supply. Stronger crude makes palm oil more attractive as a biodiesel feedstock. Tongguan Jinyuan Futures noted in a research note that uncertainty around the Strait of Hormuz is supporting energy and biofuel prices.

Biofuel demand offers a further floor. Indonesia is moving ahead with its B50 biodiesel policy, a step that could support palm oil consumption. At the same time, the ringgit strengthened 0.3% against the dollar, making the commodity more expensive for buyers holding foreign currency and adding another drag on export demand.

What it means for the market

• Weak physical demand from most destinations is capping prices despite firm energy markets.
• China remains the main active buyer, but its purchases have not been enough to lift the market durably.
• Rising April output and a stronger ringgit are working against exporters, while crude strength and Indonesia's B50 policy provide partial support.

For importers, the pullback to 4,535 ringgit per tonne offers a cheaper entry point, though the firmer ringgit erodes part of that benefit for foreign-currency buyers. For exporters, the combination of soft demand and rising production keeps competitive pressure on prices relative to soybean oil.