RPT-Palm oil prices to be under pressure until output eases, says analyst Mistry

By Rajendra Jadhav

MUMBAI, Jan 10 (Reuters) - Malaysian palm oil futures are likely to remain under pressure until production eases, after output stayed higher than expected, particularly in Malaysia, and led to a buildup in inventories, industry analyst Dorab Mistry said on Saturday.

The benchmark palm oil contract FCPOc3 for March delivery on the Bursa Malaysia Derivatives Exchange (BMD) closed at 4,043 ringgit a metric ton on Friday, after falling to the lowest level in more than six months in December.

"Palm futures on the BMD are under pressure. Fund investors have exited the market. This weakness may persist until production definitely declines," Mistry told an industry conference in Karachi, Pakistan.

Mistry forecast in November that palm oil futures could reach 5,500 ringgit a ton between January and March if Indonesia seized more palm plantations and moved towards implementing a 50% biodiesel blend, known as B50.

That bullish outlook has since shifted, however, as palm oil production rose by around 1 million tons more than expected and inventories built up, while biofuel demand has disappointed, especially in the United States, Mistry said.

Palm oil stocks in Malaysia, the world's second-largest producer, are now expected to top 3 million metric tons, up from earlier forecasts of about 2 million tons, as production was robust since October, he said.

The recent price correction has made palm oil competitive against other vegetable oils, such as soyoil and sunflower oil, but demand remains weak, he said.

Malaysia's palm oil production is likely to decline this year after surpassing 20 million tons for the first time in 2025, while Indonesia's land seizure policy could weigh on output in the second half of 2026, Mistry said.