Palm oil prices surged 9.32% to their highest level in over a year.
Palm oil futures in Malaysia recorded their biggest daily gain in three years, reaching 4,774 Ringgit/tonne, driven by the crude oil market and fuel demand.
Malaysian palm oil futures prices recorded their strongest gain in three years, reaching their highest level in over a year. This surge was primarily driven by expectations that rising crude oil prices would increase demand for the feedstock used in biodiesel production.
Price movements on international exchanges
Specifically, the FCPOc3 palm oil contract for May 2026 delivery on the Bursa Malaysia exchange rose 407 Ringgit, or 9.32%, closing at 4,774 Ringgit (US$1,204.04) per ton. During the trading session, the price briefly touched 4,803 Ringgit per ton, its highest level in over a year. By lunchtime, the upward trend had stabilized at 6.78%, reaching 4,663 Ringgit per ton.
Besides the Malaysian market, prices of other vegetable oils also rose across the board. At the Dalian Commodity Exchange, soybean oil DBYcv1 increased by 5.83%, while palm oil DCPcv1 rose by 7% at lunchtime. At the Chicago exchange, soybean oil BOcv1 also recorded a 4.54% increase.
| Exchange | Item | Increase (%) |
|---|---|---|
| Bursa Malaysia | Palm oil FCPOc3 | 9.32% |
| Dalian | Palm oil DCPcv1 | 7.00% |
| Dalian | Soybean oil DBYcv1 | 5.83% |
| Chicago | Soybean oil BOcv1 | 4.54% |
Impact from the crude oil market and exchange rates
The growth in vegetable oil prices is directly influenced by the surge in crude oil prices. On the first trading day of the week, US crude oil prices rose sharply by 20-25%, reaching their highest level since July 2022. The main reason stems from the conflict in the Middle East, which has led major producers to cut supply and concerns about disruptions to shipping through the Strait of Hormuz.
With rising crude oil prices, palm oil has become a more attractive option for biodiesel production. Additionally, the Malaysian Ringgit's approximately 0.61% decline against the US dollar during trading also contributed to making palm oil cheaper for foreign buyers, thereby boosting demand in the international market.
Technical analysis and outlook
Based on technical indicators, Reuters analyst Wang Tao believes palm oil prices are likely to break through the support level of 4,444 Ringgit/tonne. The next target for palm oil prices could be in the 4,517 – 4,615 Ringgit/tonne range in the short term.
The global palm oil market is still being affected by the ripple effects of competing vegetable oils as they vie for global market share. Developments in the Middle East and fluctuations in the USD/Ringgit exchange rate will continue to be key factors determining price trends in the coming sessions.
