Palm Oil Market Insight: Futures Rise on Weak Ringgit & Firm Competing Oils Despite High Stocks

The global palm oil market has started the week on a robust note, driven by a unique interplay of supportive and bearish factors. On one hand, Malaysia’s palm oil futures extended their rally, posting a second consecutive weekly gain, despite mounting inventory pressure in June. The market rally is notably underpinned by two main tailwinds: the weakening of the Malaysian Ringgit, which makes palm oil exports more competitive, and the price uptick in rival edible oils (such as soybean oil) on global exchanges.

These dynamics have outweighed concerns over rising Malaysian stocks, reflecting continued strong demand and speculative optimism in the edible oil complex. Furthermore, a significant private export sale of new-crop soybeans to Mexico, as reported by the USDA, signals ongoing robust demand for vegetable oils in international markets. Weather conditions and global macroeconomic uncertainties are also under close watch, as they could tip the balance for prices and physical supplies in the coming weeks. The net result is a market cautiously leaning bullish, but still sensitive to shifts in fundamentals and external shocks.

📈 Palm Oil Futures Prices (MDEX) – MYR/ton

Contract	Prior Close	Open	High	Low	Close	Change	Change (%)
Jul 25	4039	4110	4115	4070	4070	+31	+0.76%
Aug 25	4118	4117	4203	4100	4144	+26	+0.63%
Sep 25	4146	4137	4235	4125	4174	+28	+0.67%
Oct 25	4147	4141	4235	4128	4177	+30	+0.72%
Nov 25	4142	4136	4228	4123	4174	+32	+0.77%
Dec 25	4147	4139	4227	4127	4175	+28	+0.67%
Jan 26	4154	4154	4232	4135	4181	+27	+0.65%
Feb 26	4154	4145	4229	4140	4178	+24	+0.57%
Mar 26	4141	4144	4212	4122	4164	+23	+0.55%

Market sentiment: Mildly bullish, as futures are moving up despite an increase in inventory.

🌍 Supply & Demand Drivers

• USDA Report: Notable private export sale of 219,000 tonnes of new crop soybeans to Mexico. This boosts global vegetable oil demand, supporting palm oil.
• Stocks: Malaysian inventories increased in June, but robust exports and a weaker Ringgit cushion the bearish impact.
• Competing Oils: Higher soybean oil and other vegetable oil prices lift palm oil as an alternative.
• Currency: The Ringgit’s depreciation improves Malaysia’s export competitiveness on the world stage.

📊 Fundamentals Snapshot

• Production: Seasonal peak in palm oil output, but output gains are partially offset by weather risks and labour constraints in Malaysia.
• Demand: Firm demand from India and China; both countries are securing forward shipments on price dips.
• Inventories: Malaysian stocks are at multi-month highs, but export momentum is absorbing supply overhang.
• Speculators: Net long positions build as traders anticipate continued strength in vegetable oil prices.

⛅ Weather Outlook (Key Regions)

• Southeast Asia (Malaysia & Indonesia): Current forecasts indicate mostly average rainfall in the major palm oil regions over the next 2 weeks, minimising immediate drought risk. However, scattered thunderstorms could briefly hamper harvesting and logistics.
• Agronomic impact: Adequate moisture is supportive for palm yields; monitor longer-term for El Niño/La Niña developments.

🌏 Global Production & Stocks Comparison

Country	2023/24 Production (m tons)	2023/24 Ending Stocks (m tons)
Indonesia	47.7	4.2
Malaysia	19.0	2.4
India (import)	0.6	1.1
China (import)	0.4	0.9
EU (import)	2.7	0.5

📆 Trading Outlook & Recommendations

• Bullish undertone persists as weak Ringgit and rising rival oil prices counter the bearish weight of stocks.
• Export demand remains robust, but monitor for potential protectionist policy changes in Indonesia or India.
• Consider staying long with tight stops; momentum funds continue to support upside.
• A weather-driven rally is possible if forecasts trend drier or floods disrupt logistics in Malaysia/Indonesia.
• Consumers may seek to cover forward needs on price dips, as global edible oil supply chains remain sensitive.

🔮 3-Day Regional Price Forecast

Exchange	Current (MYR/t)	Forecast Range (MYR/t)	Direction
MDEX (Malaysia)	4174	4150–4230	Up/Stable
CBOT (Malaysia palm oil futures USD/t)	N/A*	N/A*	Follows the MDEX trend

*CBOT has limited palm oil trading; price signals come primarily from MDEX.