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Asia Biofuels Update: Palm Oil Drops With Crude; Tighter Fundamentals Pare Losses

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Malaysian palm oil futures fell on Monday following sharp declines in crude oil prices after US President Donald Trump's announcement of a peace deal with Iran, but a recovery in exports and weather-related supply risks limited losses.

The Bursa Malaysia Derivatives' July crude palm oil contract eased 0.11% to 4,430 Malaysian ringgit ($1,093.96) per metric ton. The August contract fell 0.16% to 4,468 ringgit/mt.

A strengthening local currency also weighed on prices, with Malaysian ringgit firming against the US dollar for a third straight session on Monday. This makes cargoes costlier to foreign buyers and weighs on export competitiveness.

Last month, Malaysian exports dropped 14.5% month over month to 1.1 million metric tons, data from the Malaysian Palm Oil Board showed.

Preliminary cargo estimates showing a 3.5% to 4.9% rebound in June 1-10 exports, versus the previous month's levels, countered weak demand sentiments

However, Malaysian shipments face competition with rising Indonesian cargoes, as exporters reportedly rush to sell palm oil ahead of the full implementation of the single-gate export system in 2027.

In key buyer China, "port arrivals are expected to face significant pressure in June and July," due to "substantial" palm oil procured, price reporting agency MySteel said.

Exportable supplies from Malaysia and Indonesia may drop once a developing El Nino weather phenomenon begins to impact yields.

Malaysian economic minister Akmal Nasrullah Mohd Nasir said that key commodity sectors may see an 8% to 10% reduction in yields as a result of dry weather, multiple media outlets reported.

During the 2015/16 El Nino episode, Malaysian palm oil yields declined between 16% to 18%, Nasir reportedly said.

S&P Global Energy, in an emailed statement to, said the last "strong" El Nino episode during that period curbed palm oil yields by 8.3% in Indonesia and 14.2% in Malaysia, despite wider acreage.

Prices could rise between 5% and 10% due to weather-related supply risks, according to Kenanga Research cited by The Star. It reportedly raised its 2026 price outlook by 4% to 4,400 ringgit/mt and its 2027 forecast by 6% to 4,450 ringgit/mt.

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