Palm Oil Prices Retreat as Traders Eye Key Chinese Economic Data.
Profit-taking and anticipation of key economic indicators from China have contributed to a downturn in Malaysian palm oil futures, while the market also braces for a potential rise in inventories.
Malaysian palm oil futures experienced a dip of around 1%, falling below MYR 4,250 per tonne in a recent trading session. The drop comes after a significant 2.5% rally, prompting traders to book profits. Market sentiment has turned cautious as investors await the release of crucial economic data from China, a major buyer of the vegetable oil.
Investors are keenly anticipating China’s July trade figures, as well as its Consumer Price Index (CPI) and Producer Price Index (PPI) data, which are expected to be released this week. A recent report indicates that China is due to release its July data on foreign trade on Thursday, with statistics on consumer and producer inflation to follow over the weekend.[1] This information will provide further insight into the economic health of one of the world’s largest economies and its potential impact on palm oil demand.
Adding to the cautious sentiment is the upcoming supply-and-demand report from the Malaysian Palm Oil Board. According to a Reuters survey, industry analysts are predicting that palm oil inventories in Malaysia rose for the fifth consecutive month in July, potentially reaching a near two-year high.[2] This increase is attributed to strong production and more subdued domestic consumption.
While exports for July are estimated to have risen by 3.2% to 1.3 million tonnes, these gains were likely tempered by aggressive competition from Indonesia, the world’s top palm oil producer. Indonesia has been offering steep discounts on its palm oil ahead of planned tariff hikes, making it a more attractive option for buyers.
In a related development, India, the largest importer of palm oil, saw a 10% decrease in its July imports, which fell to 858,000 tonnes from an 11-month high in June.[2] This decline has been linked to contract cancellations.
Despite the recent dip, losses in the palm oil market were reportedly capped by remarks from former U.S. President Donald Trump suggesting that Washington and Beijing are “very close” to extending their trade truce beyond August 12. However, the current market focus has largely shifted to the upcoming economic data from China and the supply-demand dynamics within the palm oil industry.
