Palm Oil Prices Decline Amid Stronger Crude Oil and Weak Rival Oils

Palm oil prices fell due to weak rival oils and stronger crude oil, which limited the decline.

Malaysian palm oil futures opened lower on Monday for a second consecutive session, tracking weakness in rival edible oils, despite stronger crude oil prices limiting the decline. The benchmark palm oil contract, FCPO1! for October delivery on the Bursa Malaysia Derivatives Exchange, slid 19 ringgit, or 0.44%, to 4,254 ringgit ($1,008.30) a metric ton in early trade [1].

The fall in palm oil prices was driven by the weakness in rival edible oils. The Dalian's most-active soyoil contract (DBYcv1) fell 0.42%, while its palm oil contract CPO1! shed 0.78%. Soyoil prices on the Chicago Board of Trade ZL1! were also down 0.38% [1]. Palm oil tracks price movements of rival edible oils, as they compete for a share of the global vegetable oils market.

The U.S. reaching a trade deal with the European Union and extending a tariff pause with China reduced concerns about higher levies limiting economic activity and impacting fuel demand. This boosted crude oil prices, making palm oil a more attractive option for biodiesel feedstock [1]. However, cargo surveyors estimated that exports of Malaysian palm oil products for July 1-25 fell between 9.2% and 15.2% from a month earlier, which may have contributed to the price drop [1].

The ringgit USDMYR, palm's currency of trade, weakened 0.02% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies [1]. Palm oil may test support at 4,211 ringgit per metric ton, a break below which could open the way towards 4,161 ringgit, according to Reuters technical analyst Wang Tao [1].

Despite these factors, palm oil prices have shown resilience. Over the past month, palm oil's price has risen 6.58%, and is up 8.50% compared to the same time last year, according to trading on a contract for difference (CFD) that tracks the benchmark market for this commodity [2]. The Malaysian Palm Oil Board projected production to rise to 19.5 million tons in 2025 from 19.3 million last year, due to improved labor supply [2]. However, exports are forecast to drop to 28 million metric tons this year from 29.5 million in 2024, an industry association said in Indonesia, the top producer [2].

Palm oil is expected to trade at 4,405.34 MYR/MT by the end of this quarter, according to Trading Economics global macro models and analysts' expectations [2]. Looking forward, it is estimated to trade at 4,684.59 in 12 months' time [2].

References:
[1] https://www.tradingview.com/news/reuters.com,2025:newsml_L1N3TP021:0-palm-falls-on-weak-rival-oils-stronger-crude-oil-limits-decline/
[2] https://tradingeconomics.com/commodity/palm-oil