Palm oil hits over three-month high as tightening supply and rising biodiesel demand resonate

⑴ Malaysian palm oil futures closed higher on Thursday, hitting their highest level since April 8 during the session. The benchmark October contract rose about 1.9% to 4,709 ringgit per ton, with the market expecting tighter supply and a positive outlook for biodiesel demand amid rising crude oil prices. ⑵ Institutions pointed out that funds are driving prices to break upwards, with supporting factors including the looming El Niño-related risks, expected decline in production in Q4 2026 and H1 2027, optimistic biodiesel demand amid Middle East tensions, and procurement demand ahead of India's festival season. ⑶ Dalian soybean oil and palm oil futures rose by about 0.8% and 2.9% respectively, Chicago soybean oil futures also moved higher. The Malaysian Palm Oil Council expects crude palm oil prices in August to range between 4,400 and 4,650 ringgit per ton. ⑷ Crude oil prices rose for the fifth consecutive day, hitting a new high of over a month. The escalation of US-Iran actions triggered concerns about supply disruptions in oil shipping routes. The strength in crude oil increased palm oil's appeal as a biodiesel feedstock. Ahead of peak festival demand, India is expected to increase imports of vegetable oils.