FX.co ★ Palm Oil Extends Solid Gains

Malaysian palm oil futures surged by nearly 1.5%, surpassing MYR 3,900 per tonne, marking a second consecutive session of significant gains. This rise is fueled by optimism surrounding robust export figures for May. Cargo surveyors reported an increase in shipments between 6.6% and 14.2% in the first half of the month. Adding to the positive outlook, Malaysia is actively enhancing trade relations with China through an official mission focused on unlocking new markets and promoting downstream innovation. As the third-largest buyer of Malaysian palm oil, China accounted for 10% of Malaysia’s total export value in 2024. Meanwhile, in India, the largest consumer of palm oil globally, imports have been lackluster since December but are expected to recover starting in May. Nonetheless, the rise in futures may be tempered by Malaysia's decision to lower the reference price for crude palm oil in June, placing it within the 9.5% export duty bracket, which could exert downward pressure on prices. In Indonesia, the world's leading palm oil producer, an industry organization has appealed to the government to postpone a proposed increase in the export levy, cautioning that it might undermine competitiveness amidst global trade uncertainties and geopolitical tensions.