Palm Oil Market Rallies: Weather Risks & Global Oil Climb Boost Prices

The palm oil market is undergoing a notable recovery as prices on the Malaysian Derivatives Exchange (MDEX) rise following a period of volatility. While palm oil, as a critical edible oil, is heavily influenced by global vegetable oil trends, recent upward momentum is directly linked to the surge in global crude oil prices—driven by geopolitical disturbances in Venezuela, Russia, and the Ukraine. The spillover is evident in the renewed strength in related crops such as rapeseed and soybean, despite revised record harvest estimates in Brazil putting a ceiling on oilseed gains. Weather patterns across Southeast Asia and South America remain a focal point, with potential La Niña developments threatening Indonesia and Malaysia’s output, even as early harvests in Brazil and shifting export flows in the US soybean market add to a complex price outlook. Against ongoing demand from major importers like India and China, traders are assessing macroeconomic risks, speculative positioning, and near-term weather effects—all of which set the stage for brisker trade and potentially higher volatility into early January.

📈 MDEX Palm Oil Prices

Contract Month	Closing Price (MYR/t)	Change (MYR)	Change (%)	Market Sentiment
Jan 26	3995	+22	+0.55%	Bullish
Feb 26	4013	+30	+0.75%	Bullish
Mar 26	4016	+31	+0.77%	Bullish
Apr 26	4018	+28	+0.70%	Bullish
May 26	4013	+25	+0.62%	Bullish

Prices as of 23.12.2025

🌍 Supply & Demand Drivers

• Crude Oil Influence: Higher crude oil prices, driven by tensions in key oil-producing nations, lifted palm oil and related vegetable oil markets.
• Soyoil Dynamics: US soybean oil benefited from robust exports and USDA sales to China, but the record-sized Brazilian crop and active early harvests are tempering upside potential.
• Global Vegetable Oil Flows: Malaysian and Indonesian palm oil output faces scrutiny due to weather risks and tight labor markets, while consumption remains robust, especially in India and China.

📊 Market Fundamentals

• Global Inventories: Malaysian Palm Oil Board (MPOB) data (Dec) point to steady stocks, but forecasts suggest a tightening trend if La Niña-induced rainfall disrupts upcoming harvests.
• Speculative Positioning: Funds covered shorts in rapeseed and canola markets, hinting at broader support for vegoils ahead of the holiday period.
• Related Oilseeds: Paris rapeseed (Euronext) and Winnipeg canola futures surged, tracking gains in palm and soyoil.

🌦️ Weather Outlook

• Southeast Asia (Malaysia/Indonesia): Short-term forecasts show a mix of moderate rainfall and isolated heavy downpours. While conditions remain favorable, increased risk of flooding and logistical delays is noted in Sumatra and Sabah.
• South America (Brazil): Wetter-than-average weather continues in key producing regions, aiding soybean development but raising some localized flood risks.
• Key Risks: Emerging La Niña patterns could disrupt output in Q1 2026 if intensity increases.

🔢 Production & Stock Comparisons

Country	2024/25 Production est. (mln t)	2024/25 Ending Stocks (mln t)
Indonesia	48.3	3.2
Malaysia	19.8	2.1
EU	2.7	0.7
India (import)	0.4	2.4
China (import)	0.4	1.8

USDA/Industry estimates, late Dec 2025

📌 Trading Outlook & Key Insights

• Short-term bullish impulse as fund covering and crude oil rally amplify support in edible oils.
• Monitor Indonesia/Malaysia weather into January: supply disruptions could spark further price gains.
• Watch for stabilization in soyoil/rapeseed markets for broader edible oil direction.
• Demand from India/China remains robust; any escalation in logistics or currency issues may add volatility.
• Tighten risk controls around holidays as reduced liquidity can amplify price swings.

📆 3-Day Regional Price Forecast (MDEX)

Date	Forecast Price Range (MYR/t)	Sentiment
24.12.2025	4000 – 4030	Stable
25.12.2025	4005 – 4040	Stable-Bullish
26.12.2025	4010 – 4055	Bullish