Palm Oil Futures Rise as Traders Weigh Stockpiles and El Nino Fears

Palm oil futures have risen to 4,744 ringgit per ton as traders weigh July stockpiles and export data against concerns about El Nino.

The Malaysian palm oil board reported that July inventories reached a five-month high of 2.63 million metric tons, up 3.32% from the prior month, after production outpaced demand.

However, early-August exports are expected to be stronger, with AmSpec Agri Malaysia estimating shipments up 9.21%, while Intertek put the rise at 2.6%. This suggests that demand may be improving, despite high inventories.

The bigger question is whether El Nino will impact palm oil yields and prices. Hotter, drier conditions can reduce yields, prompting traders to add a 'weather premium' to futures before it affects the physical market.