Palm oil quotes rose 3% despite increased production and stocks

According to the Malaysian Palm Oil Board (MPOB), in July, Malaysia's crude palm oil production increased by 7.09% compared to June to the highest level since September 2024 at 1.81 million tonnes, while exports only increased by 3.82% to 1.31 million tonnes after a sharp decline in June.

 

Thus, palm oil stocks in Malaysia rose again by 4.02% in July to an almost two-year high of 2.11 million tons, but traders expected an even greater increase, so futures rose yesterday.

 

Analysts polled by Reuters had forecast stocks at 2.25 million tonnes, production at 1.83 million tonnes and exports at 1.3 million tonnes.

 

Yesterday, October palm oil futures on the Bursa Malaysia exchange rose to the highest level since April 6, 2025, at 4,384 ringgit/t (about $1,036/t), showing a weekly increase of 4.7%.

 

Additional support for quotes was provided by surveyors' data on export growth from August 1 to 10 by 23.3% compared to the same period in July.

 

Prices have not yet reacted to forecasts of increased production in Malaysia and Indonesia and lower oil prices, but these factors could push prices down, especially if demand from India declines rapidly due to rising palm oil prices.

 

The Foreign Agricultural Service of the United States Department of Agriculture (FAS USDA) forecasts that in the 2025/2026 MY, palm oil production in Indonesia will increase by 3% to 47 million tons compared to the previous season due to good weather and adequate fertilizer application, and palm oil exports will increase by 5% to 24 million tons.

 

Oil prices remain at their lowest in three weeks in anticipation of US-Russian talks and a possible ceasefire, while palm oil prices are under the influence of increasing demand, but in a month a new crop of sunflower and soybeans will hit the markets, which will significantly affect quotes.