-- Malaysian palm oil futures eased on Friday, bringing weekly losses to 5%, as industry data showed a month-over-month increase in production, although a drop in inventories and a surge in exports limited declines.
The Bursa Malaysia Derivatives' May crude palm oil contract slipped 1.21% to 4,554 Malaysian ringgit ($1,149.56) per metric ton in midday trade. The June contract dipped 1.03% to 4,595 ringgit/mt.
Palm oil also remained sensitive to crude oil price movements, with futures recording their first weekly loss since March, as crude oil prices slumped over the week following the US-Iran two-week ceasefire deal.
Fundamentals were mixed, with domestic output increasing by 7.2% to 1.4 million metric tons in March versus February levels, but with exports jumping 40.7% to 1.6 mmt.
The data provided by the Malaysian Palm Oil Board also showed a 16.1% month-over-month drop in inventories to 2.3 mmt.
Demand for Malaysian palm oil is expected to increase once Indonesia begins the phased implementation of its 50% palm-based biodiesel program from July 1, to mitigate supply risks caused by geopolitical tensions.
According to the timeline released by Indonesia's energy ministry, all biodiesel users must fully adopt the B50 standard by 2028.
Prior to the full implementation of the mandate, the government will reportedly allow unsubsidized diesel to have 40% palm oil in the blend in 2027, while keeping subsidized diesel at a 50% blend, according to multiple media outlets.
Rising biofuel demand could boost palm oil prices going forward.
AmInvestment Bank, as cited by Dow Jones, projects a potential bullish reversal from the current bearish momentum, if futures consistently break the 4,675 ringgit/mt to 4,710 ringgit/mt resistance zone.