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Malaysian palm oil futures climbed for a third consecutive week, reaching their highest weekly gain since June 2022, closing at 5,100 ringgit per metric ton. A major industry conference in Bali provided projections indicating palm oil’s continued upward trajectory, fueled by tight supply and strong demand. Indonesia’s upcoming biodiesel mandate increase to 40% in 2025 is expected to intensify demand, requiring additional feedstock of around 3 million metric tons. Global palm oil output is projected to rise by 2.3 million tons in the October 2024-September 2025 period, after a prior season’s decline. The bullish outlook aligns with upward trends in other global edible oils, bolstering palm oil's price.

Key Highlights

* Malaysian palm oil futures hit highest weekly gain since June 2022.

* January futures surged 2.99%, closing at 5,100 ringgit per metric ton.

* Indonesia’s biodiesel mandate rise expected to boost demand significantly.

* Global palm oil output set to increase by 2.3 million tons in 2024-2025.

* Palm oil prices align with global edible oil rally in broader market.

Malaysian palm oil futures surged for the third straight week, with prices seeing a 4.77% weekly gain, marking the highest since June 2022. The January futures on the Bursa Malaysia Derivatives Exchange closed up 2.99% at 5,100 ringgit per metric ton, driven by expectations of tighter supply and strong demand. Darren Lim, from brokerage Phillip Nova, noted that futures opened higher and held above 5,000 ringgit, demonstrating the market’s robust bullish sentiment amid a broader rally in vegetable oils.

Supporting these price gains, Indonesia’s plans to boost its biodiesel content mandate to 40% by 2025 have added pressure on supply, as the new requirement will necessitate around 3 million additional metric tons of palm oil. Industry experts at a major conference in Bali highlighted that this mandate shift will further strengthen demand, potentially sustaining higher prices in the coming year.

The global outlook for palm oil also indicates an optimistic trend. Industry analyst Thomas Mielke projected that palm oil output will rise by 2.3 million tons in the October 2024-September 2025 season, rebounding from a 1.2 million ton drop in the previous season. Additionally, price increases for rival edible oils, like soyoil on the Dalian and Chicago exchanges, have helped sustain palm oil’s gains, as they share a competitive relationship in the vegetable oils market.

With the current dynamics of rising demand and a favorable market outlook, analysts anticipate palm oil prices will remain elevated through mid-2025.

Finally

With robust demand and a positive market outlook, Malaysian palm oil futures are expected to sustain prices above 5,000 ringgit, maintaining upward momentum into 2025.

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