Asia Biofuels Update: Palm Oil Tracks Lower Soybean Oil
Malaysian palm oil futures retreated on Thursday as rival soybean oil weakened, although losses were limited as strong exports and expanded biofuel policy in Indonesia lent support.The Bursa Malaysia Derivatives' August crude palm oil contract fell 0.37% to 4,540 Malaysian ringgit ($1,111.25) per metric ton. The September contract eased 0.11% to 4,623 ringgit/mt.Higher Malaysian exports this month have so far cushioned price downside, according to Sunvin commodity research head Anilkumar Bagani, as cited by Reuters. Cargo surveyors reportedly estimated July 1-25 shipments to have risen between 8.1% and 15.9% from a month earlier.In Indonesia, exportable supplies may drop after the government raised this year's palm oil-based biodiesel allocation to around 16.8 million kiloliters from the previous 15.6 million kiloliters, Argus reported, citing a document. This followed the new mandate introduced on July 1 to increase palm-based biodiesel blending to 50% from 40%.To maintain export competitiveness, Indonesia is reportedly seeking a US tariff exemption for palm oil exports, after the US imposed a 10% duty on nations associated with forced labor. Top palm oil producers Indonesia and Malaysia are among the countries that received the penalty in July.Demand from top importer India may strengthen in Q3 ahead of festive season.Meanwhile, in the EU, palm oil imports for the July 1-26 period reportedly dropped 39% year over year to 130,000 tons. July marks the beginning of the 2026/27 marketing year.Going forward, analysts expect a developing El Nino weather phenomenon to negatively impact long-term yields.Accordingly, RHB Research raised its crude palm oil forecast for 2027 and 2028 to 4,500 ringgit/mt and 4,400 ringgit/mt, respectively, from the previous outlook of 4,300 ringgit/mt, The Edge Malaysia reported.