Palm oil at 8-year high: Extend rally or reverse?

THE palm oil market for 2020 can be described as a tale of two halves.

In the first half of the year, crude palm oil (CPO) prices, as seen from the most liquid month of BMD CPO futures (rolling third contract month), tumbled from MYR3,150/MT in January to MYR1,939/MT in May.

The decline was a result of bearish fundamentals, including a rise in palm oil production and poor demand expectations due to the emergence of Covid-19. In addition, a decision by Malaysia to delay its adoption of biodiesel mandate added further pressure to the market.