On Thursday, palm oil prices hit a three-week low again, as global market uncertainties added further pressure. Rumors of tariff adjustments in India, along with a weak global vegetable oil market, were the main drivers of this price decline. Malaysia's benchmark palm oil contract fell by 1.36%, closing at 3,848 ringgit per ton, the lowest price in three weeks.
As the world's largest palm oil importer, India's actions significantly influence market sentiment. Recently, there has been widespread speculation that India might raise import tariffs on all edible oils to protect local oilseed farmers, causing investors to adopt a wait-and-see attitude. At the same time, falling prices of soybean oil and other vegetable oils in global markets have also intensified the pressure on palm oil prices.
Inventory issues have also posed additional challenges to the palm oil market. In August, Malaysia's palm oil inventory surged to a six-month high, with production hitting a nine-year record, while exports experienced a slowdown. Under dual pressures, market sentiment turned cautious as investors feared the oversupply could further depress palm oil prices.
Moreover, fluctuations in crude oil prices have also impacted the palm oil market. As a key component of biofuel, palm oil is closely linked to crude oil prices; thus, a drop in crude oil prices also dampens the demand for palm oil. Analysts indicate that with global market fluctuations in crude oil demand, palm oil prices might see new changes by the end of the year.
Despite numerous short-term adverse factors facing the palm oil market, policy changes in India and Indonesia could still provide some support. The market anticipates that Indonesia might lower palm oil export taxes to boost international competitiveness. This potential policy change is expected to offer opportunities for palm oil prices to rebound, and investors should stay closely tuned.
