Palm Oil Futures Hold Firm as Vegoil Complex and Biodiesel Demand Support Prices

Palm oil futures remain broadly supported, with nearby MDEX contracts edging higher amid a tight global vegetable oil balance and resilient biofuel demand, even as traders eye rising output in Southeast Asia. The forward curve is only modestly discounted, suggesting expectations of slightly easier supply but no sharp price correction in the near term.

The current market is shaped by stable global oilseed fundamentals, firm crush margins for soy, and shifting trade flows in Europe’s oilseed complex. While Malaysia’s March data show falling palm inventories and surging exports, concerns persist that seasonal production gains later in Q2 could outpace demand. At the same time, strong interest for biodiesel feedstock and ongoing geopolitical risks in energy markets are helping to underpin palm oil prices despite some recent volatility.

📈 Prices & Term Structure

The most actively traded MDEX palm oil contracts on 10 April 2026 show a firm nearby structure with only a mild downward slope along the curve:

Contract	Settlement (MYR/t)	D vs. prior (MYR)	D vs. prior (%)
Apr 2026	4,580	+9	+0.20%
May 2026	4,639	+29	+0.63%
Jun 2026	4,676	+33	+0.71%
Jul 2026	4,684	+32	+0.68%
Sep 2026	4,648	+35	+0.75%
Jan 2027	4,576	+25	+0.55%

Converted at roughly 4.7 MYR/EUR, the front-month April contract trades near 975 EUR/t, with mid-2026 deliveries around 990–1,000 EUR/t. The gentle backwardation into 2027 (contracts near 4,500 MYR/t, about 960 EUR/t) signals that the market anticipates only a modest easing of fundamentals rather than a pronounced surplus.

External benchmarks reinforce this picture: the Bursa Malaysia June CPO contract trades near 4,626 MYR/t today, down slightly intraday but still elevated after a multi-week rally.

🌍 Supply & Demand Drivers

Global oilseed fundamentals provide the backdrop for palm oil. The latest USDA report leaves key South American soybean production estimates unchanged at 48 million tonnes for Argentina and 180 million tonnes for Brazil, while trimming global oilseed ending stocks only marginally (about 0.5 million tonnes). This confirms a broadly comfortable but not oversupplied vegoil balance, offering moderate support to palm oil prices via substitution effects.

Crush margins remain attractive: both in the US and globally, soybean processing to meal and oil is increasing. Rising soyoil availability caps upside for palm to some extent, but steady demand for vegetable oils across food and energy uses continues to absorb supply. Despite slightly higher global oilseed output, stocks are edging lower, indicating that demand growth is still outpacing production at the margin.

Regionally, European oilseed trade flows add another layer. In rapeseed, Romania has overtaken Ukraine as Germany’s top supplier, with German rapeseed imports up 4% year-on-year to around 3.1 million tonnes in the first half of 2025/26. Shifts within the EU – with Romania, France and the Netherlands expanding shipments as Ukrainian exports fall back due to export duties – help stabilise regional seed and oil availability, indirectly shaping palm oil’s role as a balancing oil in European refining and biodiesel blends.

In the core palm regions, Malaysia’s March data show a sharp 40% month-on-month rebound in exports and lower inventories, even as production rises. At the same time, Thailand has just suspended crude palm oil exports for one year from 7 April 2026 to safeguard domestic biodiesel supply. This move tightens regional export availability at the margin and should be modestly supportive for Malaysian and Indonesian exporters, especially into nearby markets.

📊 Fundamentals & External Influences

On the fundamental side, the broader vegoil complex remains finely balanced. Stable global end-stocks and strong crush activity in soy point to healthy demand, with palm oil retaining its cost advantage in key importing countries. At the same time, policy and logistics are increasingly important drivers:

• Biodiesel policies: Several ASEAN producers are prioritising domestic biodiesel mandates, as illustrated by Thailand’s export ban and ongoing discussions in Malaysia about higher blend rates. This structurally raises local demand and can periodically tighten export availability.
• EU deforestation rules and trade: The EU’s sustainability regulations continue to reshape flows, pushing some buyers to diversify into rapeseed, sunflower and certified palm, while intra-EU seed trade helps buffer supply. These shifts influence relative spreads between palm and competing oils in Europe.
• Energy market link: Volatile crude oil prices and geopolitical tensions in the Middle East affect palm via biodiesel economics. Higher energy prices generally lift palm’s floor through improved blending margins, while sharp corrections in crude can briefly pressure prices lower.

Analysts currently see near-term CPO prices holding around 4,500–4,600 MYR/t in Q2 2026 before easing later in the year as production normalises and inventories rebuild. This view is consistent with today’s MDEX curve, where mid-2026 contracts trade only slightly above 4,650 MYR/t and more distant maturities drift toward 4,300–4,400 MYR/t.

⛅ Weather & Production Outlook

Weather conditions across key producing regions have generally improved after last year’s pronounced El Niño, with emerging La Niña signals bringing more regular rainfall to parts of Malaysia and Indonesia. This should support tree recovery and yield potential into the second half of 2026, pointing to higher fresh fruit bunch output and, over time, softer price pressure if demand does not accelerate further.

However, recent floods in Sabah earlier in March highlighted ongoing climate-related risks, causing a temporary drop in Malaysian production and helping to tighten the short-term balance. In Indonesia, structural expansion has slowed under tighter environmental scrutiny, but the country remains the dominant supplier and key swing factor for global availability.

📆 Trading Outlook & Strategy

• Producers / Sellers: With front-month MDEX around 4,600–4,700 MYR/t (≈980–1,000 EUR/t), consider layering in incremental hedges for Q2–Q3 sales while keeping some exposure open to benefit from potential weather or policy-driven spikes. Focus on selling into rallies above 4,700 MYR/t where margins are attractive.
• Importers / Refiners: The mild backwardation and expectations of stronger production later in 2026 argue for avoiding excessive forward cover at current levels. Instead, maintain a staggered purchasing program, increasing coverage on dips toward 4,400–4,500 MYR/t (≈930–960 EUR/t).
• Biofuel players: Monitor the palm–gas oil and palm–soybean oil spreads closely. Periods of crude oil strength and tighter regional supply (e.g. Thai export ban, weather disruptions) may improve biodiesel margins but also raise feedstock risk; consider cross-hedging with energy futures where possible.

📍 3‑Day Price Indication (Directional)

• MDEX CPO (Ringgit basis, ≈ EUR prices): Sideways to slightly firm. Nearby contracts likely to hold in a 4,550–4,700 MYR/t band (≈970–1,000 EUR/t) as tight short-term inventories offset concerns about rising output.
• European palm oil CIF (EUR/t, implied): Stable to marginally higher, tracking MDEX with a short lag and influenced by rapeseed oil spreads; modest upside risk if crude oil strengthens or if further regional policy restrictions emerge.
• Forward curve (late‑2026/2027 deliveries): Slight softening bias, with prices around 4,300–4,400 MYR/t (≈890–930 EUR/t) reflecting expectations of improved production and gradually rebuilding global stocks.