Lang
Higher production and cheaper alternatives are limiting gains in already elevated palm oil prices as inventories continue to build.
Analysts said inventories in Malaysia, the world’s second-largest palm oil producer after Indonesia, are likely to continue expanding in the coming months as production enters the peak season. This could offset any restocking activity ahead of India’s Diwali celebrations.
Hong Leong Investment Bank said in a note that crude palm oil prices will remain weak from July to September and average RM4,200 per tonne for the whole of 2025.
Benchmark palm oil futures fell to RM4,403 on Bursa Malaysia Derivatives after the data were released.
The edible oil, used in products ranging from chocolate to diesel, has risen by about 10% so far this year and has averaged RM4,344 per tonne year to date.
Data released on Wednesday by the Malaysian Palm Oil Board showed stocks rising to a 20-month high of 2.2 million tonnes by the end of August, as production grew faster than exports.
Shipments to India, the world’s largest vegetable oil buyer, also declined during the month.
CIMB Securities said exports may fall further because of palm oil’s premium over competing oils. It noted that per metric tonne, palm oil is currently trading at a premium of $72, or RM303.98, over soybean oil, $92 over rapeseed oil, and $40 over sunflower oil.
Maybank Investment Bank said preliminary data from independent cargo surveyors showed weak exports during the first ten days of September. Exports may end the month at only 1.2 million to 1.4 million tonnes, below the historical average of 1.5 million tonnes.