Palm oil dips on weaker crude, Malaysian production outlook
02/07/2026 (The Edge Malaysia) - Palm oil edged lower, weighed down by declining crude prices and expectations for strong output from the second-biggest grower, Malaysia.
Futures in Kuala Lumpur dipped 0.2% to trade near RM4,545 per tonne, erasing the previous session’s gain. Crude oil fell for a third day as shipments from the Persian Gulf accelerated, reducing the appeal of biofuels.
“The overriding short-term concern in the market right now is the weakness in the energy market with oil flowing through the Strait of Hormuz,” said David Ng, a senior trader at IcebergX Sdn Bhd. “Expectations of rising output in the coming weeks is also pressuring prices in the near term.”
The palm oil market didn’t see a major reaction to Indonesia’s gradual rollout of its expanded biofuel mandate this week — which means lower exports from the top grower — as it’s factoring in “incremental demand”, he added.
Analysts are expecting robust Malaysian production for June, while at least one cargo surveyor says exports jumped an estimated 12% on the previous month. The increase in overseas shipments was due to rising seasonal demand and restocking activity in major buyers India and China, Ng said.
Prices:
· Palm for September delivery on Bursa Malaysia Derivatives was at RM4,547/tonne at the midday break after falling as much as 0.5% earlier
· Soybean oil for December in Chicago rose 0.2% to 65.54c/lb
· Refined palm oil for September on Dalian Commodity Exchange fell 0.5% to 9,224 yuan (RM5,543.67)/tonne
· Dalian soybean oil for September rose 0.2% to 8,447 yuan/tonne
· Soybean oil’s premium over palm was at about US$332 (RM1,355.72)/tonne versus an average of about US$226 in the past year, according to data compiled by Bloomberg
· Palm’s premium over gasoil was about US$181/tonne versus an average of about US$220 in the past year, according to data compiled by Bloomberg