FX.co ★ Palm Oil Retreats, Still Poised for Solid Weekly Gains

Malaysian palm oil futures dropped below MYR 4,200 per tonne on Friday, concluding a three-session ascent. This decline followed the strengthening of the ringgit and investors taking profits after prices reached a seven-week high in the previous session. Contributing to the market's subdued mood were weaker palm oil contracts on the Dalian exchange along with declining soyoil prices in Chicago. Despite this, the market is still poised to achieve its third consecutive weekly gain, with an increase of over 2% thus far. This uptick is bolstered by anticipated stronger demand preceding the Lunar New Year and Ramadan in February, as well as tighter short-term supply, with January's production expected to decrease by 15%–17% due to seasonal trends. On the demand front, cargo surveyors indicated an 8.6%–11.4% rise in shipments from January 1 to 20 compared to the previous month, highlighting signs of enhanced exports. However, longer-term supply concerns linger due to more stringent regulations on forest exploitation in Indonesia, the leading supplier. Looking forward, the Malaysian Palm Oil Council forecasts that prices will fluctuate within the MYR 4,000–4,300 range in February.