FX.co ★ Palm Oil Retreats, Still on Track for Solid Monthly Gain

Malaysian palm oil futures decreased by 1.5% to fall below MYR 4,300 per tonne on Friday, concluding a four-day rally as traders seized the opportunity to secure profits following the commodity's climb to a three-month high earlier in the week. The decline was further influenced by the downturn in rival edible oils traded on the Dalian and Chicago exchanges, alongside investor caution preceding China's release of its January Purchasing Managers' Index (PMI), given China's significant purchasing role. Despite this temporary dip, palm oil futures are poised to register a fourth consecutive weekly increase, climbing approximately 1.8%. This rise suggests the first monthly gain in five months, with a total increase nearing 5%. The overall upward trajectory is driven by stronger export demand, with shipments from January 1-25 escalating by 7.97%–9.97% compared to those in December. Additional price support stems from seasonal demand associated with the Lunar New Year and Ramadan, as well as the expectation of reduced January production due to unfavorable weather and harvesting conditions. In India, the leading importer, refiners have canceled soybean oil imports from South America due to a weaker rupee and increased global prices, thereby making palm oil a more attractive option.