Palm oil ends the year higher due to strong exports but soyoil's spread is a factor.

The price of Malaysian palm oils futures rose on Wednesday. This was due to stronger exports, and a firmer soyoil. However, palm oil's loss of competitive advantage over soybean oil capped these gains.

At the close, the benchmark palm oil contract on Bursa Derivatives exchange for December delivery was up 37 Ringgit (0.85%) at 4,380 Ringgit ($1,041.62) per metric ton. The contract dropped 2.25% on Monday.

At midday, crude palm oil futures were marginally higher due to strong export performances and higher Chicago soybean prices, according to David Ng, a proprietary trading at Kuala Lumpur based trading firm Iceberg X Sdn. Bhd.

The narrowing of the spread between soybean oil and palm oil also weighs on palm oil prices.

Exports of palm oil-based products from Malaysia for the period September 1-20 rose between 8.3% to 8.7% on a monthly basis, according to cargo surveyors.

Dalian's palm oil contract, which is the most active contract in Dalian, increased by 0.44%. Chicago Board of Trade soyoil prices fell 0.18%.

As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price fluctuations of competing edible oils.

The price of oil increased after an industry report revealed that U.S. crude stocks declined last week. This added to the feeling in the market about tighter supplies.

Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.

Dorab Mistry, an industry analyst, said that Malaysian palm futures will likely jump by 27%, reaching a record high of more than 5,500 ringgits per ton between January and March 2026. This is due to the tightening supply in Indonesia, a major producer.

The European Union has delayed launching its antideforestation legislation for the second time. It will also delay for another year, the ban on imports such as palm oil which are associated with forest destruction.

(source: Reuters)