Malaysian palm oil futures rise on production concerns

Malaysian palm oil futures closed higher on Thursday, driven by expectations of reduced production despite concerns about softer demand due to India's duty concessions on edible oil imports. The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange ended the day up 16 ringgit at 3,895 ringgit per metric ton, marking a second consecutive day of gains.

India, the largest importer of vegetable oils globally, recently permitted limited imports of certain commodities under a tariff-rate quota system to address food inflation. Malaysian palm oil exports from June 1-25 saw a decline compared to the previous month, while production in Malaysia is forecasted to decrease by 6.3% during June 1-20 compared to the same period last year.

In related markets, Dalian's soyoil and palm oil contracts experienced slight increases, while soyoil prices on the Chicago Board of Trade also rose. The global vegetable oils market influences palm oil prices, with movements in other oils impacting its competitiveness.

Meanwhile, oil prices rose on geopolitical tensions in the Middle East, offsetting concerns about demand following an unexpected increase in U.S. stockpiles. The uptick in crude oil futures has made palm oil a more appealing choice for biodiesel production.

The Malaysian palm oil market is experiencing fluctuations driven by a combination of production concerns and shifting global demand dynamics. Despite challenges posed by India's duty concessions and changes in export volumes, the market remains responsive to geopolitical events and broader trends in the vegetable oils sector. Investors and stakeholders are closely monitoring these developments to navigate the evolving landscape of palm oil trading.