Despite falling oil prices, palm oil is rising amid increased production and inventories in Malaysia

Oil prices have fallen 10% in the past two weeks, but Malaysian palm oil quotes are down just 1%, although they are usually closely linked.

According to the Malaysian Palm Oil Council (PMOC) report released yesterday, in August, the country's palm oil production increased by 2.87% compared to July to 1.89 million tons, while exports decreased by 9.74% to 1.53 million tons, as a result of which stocks increased by 7.34% to a 6-month high of 1.88 million tons.

However, the stock market reacted rather unexpectedly to such a "bearish" report, and October palm oil futures on the Bursa exchange rose by 0.4% to 3,901 ringgits/t or $900/t yesterday.

Indonesia, the world's largest producer and exporter of palm oil, plans to lower export duties on it to increase competitiveness and exports of the oil and support local farmers.

Analysts predict that palm oil prices may break through the support level of 3,856 ringgit/t and fall to the level of 3,782-3,796 ringgit/t in the coming months.

High palm oil prices are supporting soybean and sunflower oil prices, so it will be important to watch price movements in the near term.