Malaysian palm oil futures saw a significant rebound on Monday, Despite prevailing concerns over increased palm production, declining oil prices, and a strengthening ringgit, the market showed resilience. The benchmark palm oil contract for July delivery on the BMD Exchange surged by 14 ringgit, marking a 0.36% increase, closing at 3,940 ringgit ($819.53) per metric ton. This surge put an end to the prolonged decline, the longest since September 2023, signaling a potential shift in market sentiment.

Price Competition and Production Anticipation

With the global vegetable oils market witnessing a surge in demand, palm oil faces stiff competition from alternative oils. High prices led to rationing of palm imports by various destinations, prompting a shift towards price competition in anticipation of the upcoming season’s increased production, 

Shifting Market Dynamics

The recent geopolitical developments, including the de-escalation of tensions between Israel and Iran, shifted market focus towards fundamental factors. Consequently, crude oil futures witnessed a decline, making palm oil a relatively less attractive option for biodiesel feedstock.

Currency Fluctuations and Export Trends

The Malaysian ringgit, being the currency of trade for palm oil, experienced a modest strengthening of 0.13% against the dollar, while during the period of April 1-20, 2024, Malaysian palm oil exports witnessed a notable increase According to data from Intertek Testing Services (ITS), exports surged to 905,515 metric tons or 10.18%. Similarly, independent inspection company AmSpec Agri Malaysia reported a significant uptick, with exports reaching 900,290 metric tons or 14.32%.

However during the same period. Data from the Malaysian Palm Oil Board (MPOB) revealed a decline in key metrics from April 1-20, 2024, compared to March 1-20, 2024. The Fresh Fruit Bunch (FFB) yield experienced a notable decrease of 6.47%, while the Oil Extraction Rate (OER) saw a marginal decline of 0.13%. Consequently, overall production witnessed a significant decrease of 7.15%.

 In summary, despite the impressive surge in palm oil exports during April 1-20, 2024, the industry encountered setbacks in production metrics such as FFB yield, OER, and overall production compared to the preceding month.

Regional Insights and Weather Forecasts

Indonesia’s palm oil exports remained steady, with trade ministry data indicating consistent performance. Moreover, weather forecasts predict an uptick in rainfall across Indonesia and Malaysia in late April, presenting a positive outlook for palm oil production without raising concerns of flooding, 

In conclusion, Malaysian palm oil market reveals a delicate interplay of domestic and global factors. As these uncertainties, a comprehensive understanding of the evolving dynamics for Palm trade in Neutral To Slightly Bullish Position due to narrow gap between rival soft edibles oils, it may hovering in the range of MYR3,950 to MYR4,300 per ton.