Palm Oil Futures Stabilise After Nearby Weakness on MDEX

Palm oil futures on the MDEX are consolidating in a narrow upward-sloping structure, with modest gains in forward contracts offsetting a softer nearby May 2026 expiry. The overall curve remains slightly upward sloping, signalling steady demand expectations but limited bullish momentum. After a weak close in the front May 2026 contract, the palm oil market on the MDEX has shifted into a more balanced tone. From June 2026 onward, contracts posted small daily gains of around 0.2–0.3%, with the highest liquidity centred in July–September 2026. The forward curve is only mildly higher than nearby months, suggesting that participants currently price in stable fundamentals rather than a sharp tightening or surplus. Volumes are solid in the near months, while liquidity falls off beyond mid‑2027, underlining that visibility further out remains low.

Prices & Curve Structure

The MDEX palm oil curve shows a slight contango from May 2026 into early 2027. The front May 2026 contract slipped by 0.99% to 4,451 MYR/t on 12 May 2026, while June 2026 and subsequent contracts firmed lightly on 13 May 2026. The most active July and August 2026 contracts gained about 0.27% and 0.24%, respectively, closing at 4,493–4,515 MYR/t.

Further out, prices continue to edge higher but only incrementally, with November 2026 around 4,547 MYR/t and January–March 2027 just above 4,560–4,570 MYR/t. Beyond mid‑2027, the listed contracts trade near 4,451 MYR/t, but on extremely low or zero volume, indicating that these far forwards are more indicative than traded benchmarks.

*Converted using an indicative rate of 1 EUR ≈ 5.0 MYR, for orientation only.

Supply & Demand Signals

The gently rising forward curve and modest daily gains from June 2026 onward point to an overall balanced market. Nearby weakness in May 2026 suggests that immediate physical demand is not particularly tight, possibly reflecting adequate stocks or some short‑term demand hesitation from key importers. However, the lack of any pronounced discount in nearby contracts implies that market participants do not foresee a significant oversupply either.

In the actively traded July–September 2026 strip, consistent small gains and strong volume underline that refiners and commercial buyers continue to secure medium‑term coverage. The flatness of the curve into early 2027 hints that the market expects palm oil production growth and demand—especially for food use and biodiesel—to remain broadly aligned, absent major weather or policy shocks.

Market Fundamentals & Liquidity

Turnover is concentrated in the mid‑2026 contracts, particularly July and August, which together account for the bulk of recent trading volume. This concentration supports the view that hedging activity is focused on the next harvest and export cycle, where fundamentals are better understood. By contrast, contracts from late 2027 onward show virtually no trading, limiting their reliability as a guide to long‑term price expectations.

The mild contango, together with stable prices just above 4,500 MYR/t (≈900 EUR/t), suggests that storage and financing costs are being covered but not heavily rewarded. There is little sign, at present, of aggressive speculative positioning that would drive the curve into steep contango or backwardation; instead, pricing appears largely fundamentals‑driven and cautious.

Weather & Risk Outlook

For palm oil, weather developments in key producing regions such as Malaysia and Indonesia remain a critical risk factor. With prices currently stabilised around 4,450–4,550 MYR/t, any emergence of adverse weather patterns affecting yields—such as prolonged dryness or excessive rainfall—could quickly tighten the balance and steepen the curve.

Conversely, if growing conditions remain broadly favourable and export demand underperforms expectations, the slight contango could flatten or even slip into mild nearby discounts. In such a scenario, current price levels near 900 EUR/t could face downside tests, particularly in the front months.

Trading & Price Outlook (Next 3 Days)

• Producers / Sellers: Consider incremental hedging on July–November 2026 contracts around current levels near 900–910 EUR/t, as the curve offers small carry without clear signs of tightening.
• Industrial Buyers: Use any dips in nearby futures (May–July 2026) towards the lower end of the recent range to extend coverage, as the flat curve limits the benefit of delaying purchases.
• Short‑Term Traders: The narrow daily ranges and modest contango favour range‑trading strategies, with attention to any break below the May 2026 low or a sustained push above 4,550 MYR/t as signals of a new trend.

3‑Day Directional Indication (Key MDEX Months)

• Nearby (May–Jun 2026): Slightly soft to sideways, with limited downside as long as prices hold near 880–895 EUR/t in May and around 890–900 EUR/t in June.
• Q3 2026 (Jul–Sep): Sideways with a mild upward bias, supported by active hedging interest around 900–905 EUR/t.
• Late 2026–Early 2027: Largely stable, with prices around 905–915 EUR/t and low short‑term probability of a sharp move absent new fundamental news.