Palm oil futures are falling, and will likely lose money annually in 2025
Malaysian palm futures dropped on Wednesday, and are headed to a loss by 2025 - a volatile year plagued by geopolitical uncertainty and tariffs.
The traders are 'optimistic' that the festive season and the decline in production in 'Indonesia' will support prices. The benchmark March palm oil contract on the Bursa Derivatives exchange lost 19 ringgit or 0.47% to 4,051 Ringgit ($998.52) per metric ton at the midday break.
Futures prices have fallen by 8.93% so far in 2025. It had gained almost 20% last year.
The Farm Trade, a Kuala Lumpur based consultancy and trading firm, said that the palm market was volatile this year. It fluctuated from highs to lows between 4,650 and 3,725 ringgit.
He said that prices could be supported by the upcoming Ramadan, Eid, and an expected decline in production in Indonesia.
He warned, however, that 2026 may still be volatile due to changing global economic scenarios and currency fluctuations, as well as crude oil prices. Dalian's palm oil contract dropped 0.05%, but the most active soyoil contract increased 0.03%. Chicago Board of Trade soyoil prices were down by 0.16%.
Palm oil follows the price movement of other edible oils as it competes to gain a share in the global vegetable oils markets. According to a Trade Ministry Regulation, Indonesia set its crude palm olefins reference price for January at $915.64?per metric ton. This is down from the $926.14 per ton in December.
The oil price was little changed Wednesday, but is expected to fall
More than 15%
In 2025, the supply will outpace demand, thanks to wars, tariffs, OPEC+'s output, and sanctions against Russia, Iran, and Venezuela.
Palm is less attractive as a biodiesel source because crude oil futures are weaker. The ringgit (palm's trade currency) has weakened by 0.3% against the US dollar. This makes?the commodity more affordable for buyers with foreign currencies. Technical analyst Wang Tao believes that the price of palm oil FCPOc3 could retest its support level at 4,044 Ringgit per metric tonne. A break below this mark would trigger a drop into a range between 3,964 and 4,008 Ringgit.
(source: Reuters)
