Palm Oil Jumps Above 4,000 Ringgit Amid Soyoil and Crude Rally

Palm oil prices jumped above 4,000 ringgit, tracking gains in soyoil, which surged on Washington's proposal to allow refiners to blend a record amount of biofuels into gasoline and diesel. The plan aims to boost American biofuel production and deter imports, sustaining edible oil demand and crude palm oil prices. Crude oil prices are also rising due to the conflict in the Middle East, further buoying palm oil prices.

Palm oil prices have surged above the 4,000 ringgit mark, tracking gains in soyoil, which surged on Washington's proposal to allow refiners to blend a record amount of biofuels into gasoline and diesel. The Environmental Protection Agency (EPA) announced a plan on June 16, 2025, that would require refiners to mix a record 24.02 billion gallons of biofuels into conventional diesel and gasoline, nearly 8% higher than the 2025 target [1].

This proposal is supportive of edible oil demand and crude palm oil prices, as the biodiesel mandate will help sustain US consumption of edible oils, according to CIMB Securities analysts Ivy Ng Lee Fang and Lim Yue Jia [1]. Chicago soy oil extended gains on Monday after surging more than 6% on Friday, putting it on track for the biggest two-day jump in almost three years. Palm futures surged as much as 4.1% in Kuala Lumpur [1].

The rally in crude oil prices due to the conflict in the Middle East is also buoying palm oil prices. Global benchmark Brent extended gains on Monday after surging 7% on Friday. Investors are bracing for any attacks on energy infrastructure and shipping in a region that produces around a third of the world’s crude [1].

"Potential escalation could disrupt oil supplies, pushing energy prices higher and increasing both the cost of palm oil production and demand for biofuels," said Darren Lim, a commodities strategist at Phillip Nova Pte. "Biofuels become more competitive when crude prices rise, often prompting shifts in demand away from petroleum-based fuels," he said in a note [1].

In addition to the biofuels mandate, the global asset market is also fluctuating due to geopolitical tensions. If the global oil supply is blocked, the investment will be concentrated on oil shock-class safe assets to reach USD 4,000. The domestic stock market is also rapidly emerging as a haven for defense and shipbuilding investments [2].

International oil prices and stock market volatility are increasing as Israel continues airstrikes across Iran. If the conflict is prolonged, such as the war between Russia and Ukraine, downward pressure on the risky asset market is likely to increase due to rising oil prices, inflation, and interest rate pressures [2].

West Texas Intermediate (WTI) futures closed at $72.98 on the New York Mercantile Exchange on June 13, up 7.26% from the previous trading day, the highest since 2022 when Russia invaded Ukraine and sent energy prices soaring [2].

India's palm oil imports jumped to a six-month high in May, driven by low inventories and the tropical oil's price discount to rival soyoil and sunflower oil, which prompted refiners to boost purchases. Higher imports of palm and soyoil by India, the world's biggest buyer of vegetable oils, could support Malaysian palm oil prices and US soyoil futures [3].

Palm oil imports rose 84% in May from April to stand at 592,888 metric tonnes, the highest since November 2024, the Solvent Extractors' Association of India (SEA) said. India imported an average of more than 750,000 tonnes of palm oil each month during the marketing year that ended in October 2024, the SEA said [3].

Higher imports of palm oil and soyoil lifted India's total vegetable oil imports in May by 33% from a month before to 1.19 million tonnes, the highest since December, it said. Below-average imports from January to April reduced domestic vegetable oil stocks to 1.33 million tonnes by June 1, the lowest since July 2020, according to SEA data [3].

References:
[1] https://www.bloomberg.com/news/articles/2025-06-16/palm-oil-jumps-above-4-000-ringgit-mark-to-track-soy-oil-crude
[2] https://www.mk.co.kr/en/stock/11343358
[3] https://theedgemalaysia.com/node/758786