Palm Oil Retreats on Supply Worries and EU Policy Risks
Malaysian palm oil futures dropped below MYR 3,820 per tonne, ending a two-day rise amid concerns over increasing production. The Malaysian Palm Oil Association reported a 3.5% month-on-month rise in output during the first 20 days of May, heightening supply-related apprehensions. Simultaneously, the European Union is preparing to introduce its "country benchmarking system" as part of the EU Deforestation Regulation (EUDR) by June 30. This system will classify countries as "low," "standard," or "high" risk in an effort to combat deforestation, covering seven essential commodities including palm oil. However, the decline was somewhat mitigated after U.S. President Trump deferred a proposed 50% tariff on EU goods. Supporting prices further, demand from India—the largest buyer—is anticipated to rebound following a recent slowdown. On the export side, cargo surveyors indicated that Malaysian shipments for May 1–20 increased by 1.6% to 5.3% compared to April. Additionally, Malaysia and China have entered into a strategic agreement to establish a palm oil supply chain in western China.
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