Palm oil reaches 3-month high due to supply risk and biodiesel demand prospects

Malaysian palm oils futures closed higher on Thursday, after reaching their highest level in over three months. This was due to expectations of tighter supplies and stronger demand from the biodiesel industry as crude prices rise.

The benchmark contract for October delivery of?palm?oil on Bursa Malaysia's Derivatives exchange gained 87 Ringgit or 1.88% to 4,709 Ringgit ($1,152.19), a metric tonne at the close.

The contract reached 4,721 ringgit during the session. This is its highest level since March 8.

Funds are pushing for an 'credible breakout', backed by El Nino risks, lower production expectations in Q4 of 2026 and H1 of 2027 and biodiesel prospects amid Middle East tensions, and expected festive demand from India, said Sandeep Singh of The Farm Trade in Kuala Lumpur.

Dalian's soyoil contract, which is the most active in Dalian, grew by 0.75% while palm oil contracts grew by 2.85%. Prices of soyoil on the Chicago Board of Trade increased by 0.84%.

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

The Malaysian Palm Oil Council announced on Wednesday that crude palm oil in Malaysia is expected to be priced between 4,400 and 4,650 Ringgit ($1,076 to $1,137) a metric ton.

The oil price rose for the fifth consecutive day on Thursday as fears of disruptions in supply along oil transit routes were stoked by the escalating hostilities involving?the United States? and Iran.

Palm oil futures are more attractive due to the stronger crude oil prices.

India's edible oils imports will likely increase between July and October, as slower soybean and Rapeseed crushing?erodes the domestic supply ahead of peak festival demand.

Rabobank reported on Thursday that the soybean crop for 2026/27 in Brazil is expected to drop by 2% to 178 million tons, from a record-breaking last cycle. However, market challenges may result in a stabilization of the planted area. $1 = 4,0870 ringgit

(source: Reuters)