Palm oil futures firm as near-term MDEX structure turns steeper

MDEX palm oil futures strengthened across the front curve on 5 May, with nearby contracts up around 0.6–0.9% and the curve remaining in moderate backwardation into 2027. The move signals renewed concern over nearby supply and strong pricing power in the coming months.

Palm oil is trading in a clearly firmer structure on the Malaysian derivatives exchange, with gains concentrated in 2026–27 positions while the ultra‑long tail from 2028 remains static and illiquid. The market is paying a premium for prompt to medium‑term coverage, suggesting traders are increasingly focused on weather, export demand and rival vegetable oils over the next 12–18 months. The relatively low volumes in the distant contracts underline that current pricing is driven by practical hedging needs and short‑ to medium‑term fundamentals, not long‑dated speculation.

📈 Prices & Curve Structure

The MDEX palm oil strip on 5 May 2026 shows a firm, mildly backwardated curve, with front contracts outperforming the back months into mid‑2027, while ultra‑deferred 2028–29 positions remain unchanged and illiquid.

Contract (MDEX)	Close (MYR/t)	Approx. Close (EUR/t)*	D / Day (MYR)	D / Day (%)
May 2026	4,580	≈ 980	+26	+0.57%
Jul 2026	4,663	≈ 993	+41	+0.88%
Dec 2026	4,693	≈ 999	+43	+0.92%
May 2027	4,597	≈ 979	-6	-0.13%
Nov 2027	4,542	≈ 967	+4	+0.09%

*EUR conversion based on ~4.7 MYR/EUR, indicative only.

Front‑month May 2026 settled at 4,580 MYR/t, up 0.57% on the day, with steady but moderate volume. The mid‑curve (Jun–Dec 2026) gained 0.8–0.94%, closing between roughly 4,627 and 4,695 MYR/t, indicating stronger buying interest as users and traders extend coverage through the second half of 2026.

Into 2027, prices ease slightly, with May 2027 at 4,597 MYR/t and further deferred contracts gradually lower, reflecting a backwardated structure that rewards nearby sales over long‑term storage. Contracts from January 2028 through March 2029 remain indicated around 4,496 MYR/t without trading volume, showing limited market conviction so far out on the curve.

🌍 Supply, Demand & Market Drivers

The current upward move in the 2026 strip and firm backwardation are consistent with a market concerned about short‑term availability relative to demand. Stronger pricing in the near and mid‑term suggests expectations of tightness during upcoming export windows and possible weather‑related production risks in key origins.

Demand from major importers is likely underpinning nearby contracts as buyers look to secure coverage before any further rally. At the same time, the modest backwardation points to a belief that, over the longer run, output growth and potential normalization in competing oils could alleviate tightness, moderating prices beyond 2027.

📊 Fundamentals & Curve Signals

The curve shape sends a clear signal: physical barrels in 2026–early 2027 are more valuable than later delivery, incentivizing sellers to bring product forward and discouraging lengthy stockholding. This is typical in phases of anticipated short‑term constraint combined with longer‑term supply confidence.

The stronger moves in highly traded 2026 contracts and smaller changes in thinner 2027 positions underline that current pricing is driven primarily by near‑term fundamental flows rather than long‑dated speculation. The absence of volume in 2028–29 indicates that these maturities are more indicative markers than true price discovery points at this stage.

📆 Short-Term Outlook (Next 1–2 Weeks)

With the front months closing near session highs and the mid‑curve pushing higher, the technical tone remains constructive in the very short term. The market appears more likely to test the upper end of the recent trading range than to break sharply lower, as long as no clear sign of demand destruction or a surprise improvement in supply emerges.

However, the existing backwardation suggests limited appetite to price in a prolonged bull run far into the future. Participants will closely watch fresh export data, production updates and signals from rival vegetable oil markets when refining their near‑term expectations.

🧭 Trading Outlook & Strategy Hints

• Producers / Sellers: Use current strength in the 2026 strip to incrementally hedge forward, focusing on Jul–Dec 2026 where price gains and liquidity are strongest, while keeping some exposure for potential further upside.
• Industrial buyers: Consider securing portions of 2026–early 2027 requirements on dips, as the curve still rewards forward cover compared with spot if tightness persists.
• Traders: The mild backwardation offers opportunities in calendar spreads, particularly selling mid‑curve and buying further deferred if signs of easing fundamentals into 2027 strengthen.

📍 3-Day Directional View (EUR Basis)

• MDEX nearby (May–Jul 2026): Slightly bullish bias; consolidation with an upward tilt around the equivalent of 975–995 EUR/t.
• Mid‑curve (H2 2026–H1 2027): Stable to firm, with prices expected to hold near or slightly above current EUR levels barring a sharp shift in related markets.
• Far‑dated (late 2027–2029): Directionally flat; extremely thin liquidity means any moves will likely follow, not lead, changes in the more active near contracts.