FX.co ★ Palm Oil Poised for First Weekly Drop in Four

Malaysian palm oil futures experienced a decline of over 2%, falling to below MYR 4,250 per tonne, and effectively ending a three-day upward trend. This dip came in response to weaker performances in both the Dalian palm olein and Chicago soyoil markets. Market sentiment was further dampened by indications of increased output following the Malaysian Palm Oil Board's projection of a production rise to 19.5 million tons by 2025, up from 19.3 million tons last year, attributed to improved labor availability. In Indonesia, which leads global production, exports are anticipated to decrease to 28 million metric tons this year, down from 29.5 million in 2024, according to an industry association. As the week progresses, palm oil seems poised for its first weekly decline in nearly a month, registering a decrease of approximately 1.8% thus far. This trend is influenced by persisting global trade uncertainties as anticipation builds around the upcoming third round of U.S.-China trade negotiations set for next week in Stockholm. Without an extension before the August 12 deadline, tariffs could escalate significantly, potentially reaching 145% on U.S. exports and 125% on Chinese imports. Nevertheless, a weaker ringgit provided some buffer, mitigating further losses. Additionally, purchasing activity from India, the largest buyer, is anticipated to increase in preparation for Diwali in mid-October.