PALMOILMAGAZINE, KUALA LUMPUR — Malaysian palm oil futures strengthened on Tuesday (Dec 30), supported by expectations of lower production due to adverse weather conditions and short-covering activity ahead of the year-end holiday period.
The benchmark palm oil contract for March 2026 delivery on the Bursa Malaysia Derivatives Exchange rose by RM25 per tonne, or 0.62%, to RM4,072 per tonne during the midday trading session. The rebound followed a correction in the previous session, which had ended a four-day rally.
According to Reuters, Paramalingam Supramaniam, Director of Selangor-based brokerage Pelindung Bestari, market sentiment improved amid signs that palm oil output in December could come in lower. This is largely attributed to rising rainfall in eastern Malaysia, particularly in the state of Sarawak.
The Malaysian Meteorological Department has issued a warning of a monsoon surge expected between January 1 and 5, which could bring heavy rainfall to Sarawak, along with strong winds and high waves in the South China Sea.
“We are also seeing short-covering activity today ahead of the holidays,” Supramaniam said. However, he cautioned that further price gains may be limited by weaker demand, a stronger ringgit, and record soybean harvests in South America.
In the global vegetable oil market, the most-active soybean oil contract in Dalian edged up 0.33%, while palm oil futures on the same exchange gained 0.84%. Soybean oil prices on the Chicago Board of Trade also posted a modest increase of 0.24%.
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Palm oil prices often track movements in competing vegetable oils as they vie for global market share. Meanwhile, global crude oil prices declined after surging more than 2% in the previous session. The pullback was partly driven by a correction in precious metals prices, although ongoing Russia–Ukraine tensions continue to raise concerns over potential supply disruptions.
Lower crude oil prices have reduced palm oil’s appeal as a biodiesel feedstock. At the same time, a firmer ringgit—up about 0.17% against the US dollar—has made palm oil relatively more expensive for buyers using foreign currencies.
Market participants are expected to continue monitoring weather developments, currency movements, and broader global market dynamics, all of which are likely to shape palm oil price direction in the near term. (P2)
