Malaysian palm oil futures dropped sharply on Tuesday, slipping below MYR 4,150 per tonne and erasing the modest gains recorded in the previous session. Prices hovered near their lowest level in nearly three weeks, pressured by a stronger ringgit and broad weakness in edible oils on the Dalian exchange. Market participants also grew more cautious ahead of China’s upcoming CPI and PPI releases later this week, given China’s importance as a major palm oil buyer.
The decline in prices was partially limited by monthly data from the Malaysian Palm Oil Board, which pointed to a tighter supply outlook. Palm oil inventories fell 7.72% month-on-month in January, while production dropped 13.78%. Over the same period, exports rose 11.44%.
In a separate development, an industry official noted that Malaysia’s area of ageing oil palm plantations is expected to increase to 2 million hectares by 2027, up from around 1.7 million hectares currently. Meanwhile, demand from leading consumer India is projected to recover this year as prices soften, though increased competition from Chinese soyoil is likely to cap further price gains.
