Malaysian palm oil futures extended gains on Tuesday as export demand continued to show resilience despite rising stockpiles.
The Bursa Malaysia Derivatives' September crude palm oil contract edged higher by 0.39% to 4,649 Malaysian ringgit ($1,136.48) per metric ton. The October contract rose 0.51% to 4,747 ringgit/mt.
Cargo surveyors reportedly estimated Malaysian shipments in the Aug. 1-10 period to have risen between 2.6% and 14.8% from a month earlier. This followed month-over-month increases in June and July of 7.2% and 14.5%, respectively.
Exports to the EU, India, and the Middle East remained strong last month, but shipments to China and the US softened, according to Public Investment Bank, as cited by the New Straits Times.
Palm oil price gains were capped as domestic inventories reached a five-month high of 2.6 million metric tons last month. Higher production and weaker domestic demand have offset export growth, according to TA Securities, as cited by The Edge Malaysia.
The firm reportedly noted that, year over year, stocks rose 24.3% as exports grew 4.8%. Production, domestic consumption, and imports, on the other hand, fell 1.1%, 19.5%, and 6.9%, respectively.
RHB Research reportedly projects Malaysian inventories to remain above 2 mmt this year, as the potential supply impact of the El Nino weather phenomenon will likely materialize toward year-end through 2027.
In Indonesia, stocks could deplete 28% year over year to 3.1 mmt as a higher biodiesel blending of 50% progresses, according to Public Investment Bank.
Analysts expect weather-related supply risks and expanding biofuel policies to support palm oil prices going forward, with CIMB Securities reportedly revising its 2026 and 2027 price outlook upward by 50 ringgit/mt to 4,450 ringgit/mt and 4,550 ringgit/mt, respectively.
This week, "crude palm oil futures are expected to trade with a neutral-to-mildly bullish bias," but "elevated Malaysian stocks and rising production may limit the upside," financial services firm Phillip Capital said.