According to data from SunSirs, the domestic palm oil market saw a recovery in early August, with prices trending upward amidst volatility. The average market price rose by 2.04%, moving from 9,234 RMB/ton on August 1 to 9,422 RMB/ton on August 11.

Key Factors Influencing Palm Oil Price Movements

Supply Side: In July, Malaysian palm oil production entered a seasonal growth phase, with monthly output rising by 7.4%–7.5% month-on-month. Market estimates placed Malaysian palm oil inventories at 2.61 million tons by the end of July—a four-month high—indicating significant short-term inventory pressure at the source.

Exports: Malaysian palm oil exports rose by approximately 21% month-on-month in July; export figures for early August remained positive, helping to draw down stocks and alleviate inventory accumulation pressure.

Domestic Market: During the week of August 7, commercial palm oil inventories in key regions stood at approximately 860,000 tons, an increase of over 30,000 tons (or more than 4%) from the previous period.

Demand Side: The market is currently in the traditional off-season for edible oils; catering and food processing sectors are limiting purchases to essential needs, with little appetite for stockpiling. High domestic inventory levels are capping the potential for spot price increases. Additionally, low soybean oil prices have led to significant substitution, squeezing palm oil's share of the edible consumption market; the widening price spread between soybean oil and palm oil is further dampening demand for the latter.

Summary: As we move into late August, the domestic palm oil market remains dominated by bearish fundamentals. Supply pressure persists and demand remains weak, leading to continued price volatility.

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