Palmetto closes slightly higher, despite increasing production and India demand concerns

Malaysian palm futures ended Thursday on a higher note, despite increasing production expectations and concerns about demand from India, the country's largest buyer.

At the close, the benchmark contract for palm oil delivery in January on Bursa Derivatives Exchange rose by 2 ringgits, or 0.05%. It was 4,126 ringgits ($976.80), per metric ton. The contract dropped 0.31% during the previous session.

Anilkumar bagani, head of research at Mumbai-based Sunvin Group and vegetable oil broker, said that the palm oil price was further impacted by a sell-off of crude oil and a stronger ringgit.

Trade and Industry officials have said that Malaysia's crude oil palm production will surpass 20 million tonnes for the first-time in 2025. This is due to favourable weather conditions, an improved labour supply and new, higher-yielding plantations.

Eddy Martono, chair of the Indonesia Palm Oil Association, said that Indonesian palm oil production for January-September was over 43 million tons. This represents an increase of 11% annually.

A leading industry group said that India's palm-oil imports fell to their lowest level for five years in the 2024/25 year. Meanwhile, soyoil purchases soared to record levels as palm oil became less appealing to buyers due to an increasing price premium.

Dalian's soyoil contract, which is the most active contract in Dalian, rose by 0.6%. Palm oil contracts also increased by 0.09%. Chicago Board of Trade soyoil prices rose 0.4%.

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

The oil prices continued to decline, adding to the losses of the previous session. A report that showed rising crude inventories at the United States' ports reinforced fears about global oversupply.

Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.

The palm ringgit's trade currency strengthened by 0.17% against dollars, increasing the price of the commodity for buyers who hold foreign currencies.

(source: Reuters)