FINWIRES · TerminalLIVE
FINWIRES

Asia Biofuels Update: Palm Oil Falls Along With Soybean Oil, Crude Oil

By

Malaysian palm oil futures slipped on Thursday as crude oil and rival soybean oil dipped, and as the local currency firmed, making exports more expensive to foreign buyers.

The Bursa Malaysia Derivatives' August crude palm oil eased 0.95% to 4,485 Malaysian ringgit ($1,103.81) per metric ton. The September crude palm oil contract lost 1.01% to 4,511 ringgit/mt.

Malaysian ringgit partially recovered after two sessions of losses, gaining 0.29% against the US dollar on Thursday. This dampens attractiveness of exports due to resulting higher costs.

In June, Malaysian exports likely rose month over month between 10.6% and 11.1%, according to cargo surveyors. The industry body is set to release monthly data on July 10.

In Indonesia, the implementation of a higher biodiesel blend of 50%, or B50, has begun in line with the applicable regulations, energy ministry official Noor Arifin Muhammad told Reuters.

The government is currently preparing the revised biodiesel allocation to determine the volume of palm-based biodiesel that producers must supply to fuel retailers to produce B50, according to Indonesian Biofuel Producers Association vice chairman Catra De Thouars, as cited by the news agency.

The energy ministry had initially allocated 15.6 million kiloliters of biodiesel for 2026 to meet the previous B40 mandate.

Indonesia's expanding biofuel policies and weather-related supply risks are expected to support the palm oil market in H2, with analysts cited by The Star estimating prices to range between 4,000 ringgit/mt and 4,400 ringgit/mt during the period.

MBSB Research reportedly expects importing countries to rebuild inventories ahead of the potential supply tightness driven by the El Nino weather phenomenon.

BIMB Securities Equity Research analyst Saffa Amanina Mohd Anwar, as cited by The Edge Malaysia, projects that production of fresh fruit bunches will start to decline in late 2026, and will be severely impacted in 2027 following a time lag effect of around six to 12 months.

CIMB Securities head of research Ivy Ng reportedly expects 2026 crude palm oil output to drop 2% to 3% year over year to between 19.7 million metric tons and 19.9 mmt, from 2025 production of 20.3 mmt.

Plantation consultant M R Chandran, as cited by the news agency, also forecasts Malaysian output to decline to 19.7 mmt this year. Indonesian production, meanwhile, could reportedly fall to around 51 mmt from last year's 51.7 mmt.

Related Articles

Commodities

NRC Proposes Broad Overhaul of Nuclear Power Plant Licensing Rules

The US Nuclear Regulatory Commission on Wednesday proposed sweeping reforms in what it described as its most comprehensive update to nuclear power plant licensing in decades.The proposal would update licensing, safety oversight and siting requirements across every stage of a nuclear plant's lifecycle, from design and construction through operation, license renewal and decommissioning.The NRC said the proposal draws on decades of operating experience, lessons from new reactor licensing and the emergence of advanced reactor technologies. It also advances reforms required under the ADVANCE Act of 2024 and Executive Order 14300."This proposed rule strips out rigid frameworks and unnecessary conservatism to accelerate the safe deployment of new reactors and expand existing capacity across America," NRC Chairman Ho Nieh said.The proposal would streamline reactor construction by concentrating regulatory oversight on the most safety-significant systems and permitting certain early site activities under a general license after an application is docketed.Applicants and licensees would gain greater flexibility to use risk-informed methods instead of traditional approaches for safety reviews and model updates. The proposal also expands performance-based emergency planning to all reactor types.The proposal would let operators adopt an internationally recognized quality assurance standard. It also extends license renewal periods, broadens siting rules and introduces more flexible decommissioning funding requirements for advanced reactors.The NRC also proposed updating safety rules to support higher-enriched and accident-tolerant fuels by focusing on credible, risk-significant scenarios.Separately, in a related proposal also released Wednesday, the NRC unveiled revisions to its radiation protection regulations.While the proposed changes retain existing public and worker dose limits, they would replace the long-standing "as low as reasonably achievable" or the ALARA principle with a framework centered on compliance with established regulatory precautions and existing dose limits.According to the NRC, the current dose limits are already set well below levels associated with known health effects, and maintaining ALARA as a separate regulatory expectation has added costs and complexity without delivering measurable safety benefits."We're raising the standard for regulatory clarity, not lowering the standard for safety," Nieh said, adding that the proposal would not alter existing public or occupational radiation exposure limits.The regulator said the proposal is part of its broader effort to modernize its regulatory framework, reduce unnecessary compliance burdens, and ensure its rules reflect current science while maintaining public health and safety protections.The NRC will accept public comments for 45 days after the proposal is published in the Federal Register and plans to hold a public meeting during the comment period.

Commodities

China's 2026 LNG Demand Outlook Weakens as Industrial Consumption Slows, Kpler Says

Kpler lowered its 2026 China LNG demand forecast to 63.5 million metric tons as it expects weaker industrial activity to weigh on consumption later this year, the firm said in a Wednesday note.Kpler expects industrial activity to remain broadly stable through July and August before slowing in Q4, as weaker petrochemical, property and glass sectors reduce industrial gas consumption.Analysts expect Asian spot LNG prices to remain rangebound through Q3 as restocking demand supports the market. The firm expects prices to turn more bearish in Q4 as weaker industrial LNG consumption eases buying interest.China's apparent gas consumption fell 4% over the year to 34.98 billion cubic meters in April, according to the National Development and Reform Commission. Kpler estimates industrial gas demand declined by about 1.9 bcm over the year in May.Industrial gas demand came under pressure as supply concerns surrounding the Strait of Hormuz lifted Asian LNG prices, Kpler said. The firm expects the US-Iran peace deal to ease geopolitical risks and boost Middle Eastern methanol exports to China.Lower geopolitical risk following the US-Iran peace deal should increase Middle Eastern methanol shipments into China, loosening the domestic methanol market and weighing on local methanol production, Kpler said.Methanol-to-olefin economics have recovered modestly since gross margins fell to -$108 per metric ton in early June. However, Kpler said weak downstream petrochemical demand is likely to cap further margin gains and limit additional gas consumption.China's property downturn and persistent overcapacity across the solar supply chain are expected to reduce glass production in Q4, adding further pressure to industrial gas demand, according to the note.China's transport-sector LNG demand has also begun to soften. LNG truck sales reached 13,900 units in May, holding broadly steady over the year while remaining above the five-year average.Despite LNG's fuel-cost advantage over diesel, Kpler expects improving economics for electric heavy trucks to slow LNG truck adoption. Lower fleet utilization and weaker freight activity are also expected to weigh on demand through the fourth quarter.Reflecting those headwinds, Kpler reduced its 2026 China LNG demand forecast by 200,000 mt to 63.5 million mt, citing weaker industrial gas consumption later in the year.

Commodities

US Natural Gas Update: Futures Fall on Expectations of Larger Storage Build

US natural gas futures extended losses in after-hours trading on Wednesday as expectations for a larger-than-average increase in domestic gas inventories outweighed support from an intense heatwave expected to drive cooling demand across much of the country.The front-month Henry Hub contract and the continuous contract fell 1.95% to $3.211 per million British thermal units.Market participants await Thursday's weekly US Energy Information Administration storage report. According to Barchart, analysts expect natural gas inventories to rise by about 83 billion cubic feet for the week ended June 26, well above the five-year average injection of 64 Bcf for the corresponding week.Gelber & Associates projected an 81 Bcf storage injection. "For now, the market is not ignoring the heat, but it is also not treating it as a reason for a clean breakout while storage remains healthy and the forecast moderates beyond the front-end heat pulse," Gelber & Associates said in a Wednesday market note. "Furthermore, most forecasting models have maintained warmer-than-normal summer temperatures for the past few months, so it is likely priced in at face value."Near-term weather conditions, however, remain supportive of demand. Forecasts for July 1-5 continue to call for triple-digit daily highs across major population centers in the Midwest and Eastern US, lifting electricity demand and projected natural gas consumption.However, prices also came under pressure as weather forecasts for mid-July turned slightly cooler, potentially easing demand for air conditioning among power generators. Barchart reported that the Commodity Weather Group expects near-normal seasonal temperatures across the eastern US during July 6-15.Barchart, citing BNEF data, said Lower 48 US gas demand reached 80.2 Bcf per day on Wednesday, up 0.8 Bcf from the previous day and 4.0% higher than a year earlier. Celsius Energy estimated power-sector gas consumption at 39.2 Bcf on June 29, an increase of 3.9 Bcf from the previous day, although still 3.4 Bcf below the same day last year.On the supply side, US dry gas production averaged 110.5 Bcf/d on Wednesday, down 1.6 Bcf from the previous day but still 1.7% above year-earlier levels, reflecting continued robust output.Meanwhile, estimated net feedgas flows to US LNG export terminals slipped by 0.5 Bcf/d to 19.2 Bcf/d on Wednesday, remaining at historically strong levels and up 0.7% from a week earlier.