Palm oil futures edge higher as forward curve steepens modestly
Palm oil futures edge higher on MDEX with a mildly steeper forward curve, signaling steady demand, balanced supplies and a cautiously bullish short-term outlook.
Prices & Forward Curve
The MDEX palm oil curve on 29 May 2026 shows a mild contango from nearby to early 2027:
Converted approximately into EUR (using ~1 MYR ≈ 0.21 EUR), the active strip trades around 940–985 EUR/t. The moderate day‑on‑day increases across the curve underline a stable, constructive tone rather than a sharp rally.
Supply & Demand Context
The slight contango, with later 2026 and early 2027 contracts pricing 100–200 MYR/t above June 2026, suggests expectations of steady demand growth and only gradual supply expansion. Stronger prices into Q4 2026 and Q1 2027 often reflect seasonal production risks and potential weather‑related yield variability in Southeast Asia.
Open interest and volumes are clearly concentrated in Aug–Sep 2026, where liquidity is highest and where commercial hedging against export programs is most active. The absence of pronounced backwardation implies that nearby physical tightness is limited for now, while buyers are comfortable spreading coverage into later months rather than rushing to secure prompt barrels at any price.
Fundamentals & Market Structure
- Curve shape: The upward tilt from ~4,480 MYR/t in June 2026 towards ~4,680 MYR/t in March 2027 points to a balanced to slightly tight forward fundamental picture, with storage and financing costs adequately reflected in spreads.
- Volatility: Daily moves remain contained (generally below 1%), indicating that the market is consolidating after earlier swings and awaiting clearer signals from export data, biodiesel mandates and competing vegetable oil markets.
- Liquidity: August and September 2026 contracts show the highest turnover, which is typical around key export shipping windows and tends to anchor price discovery for the rest of the curve.
Short-Term Outlook
With the entire curve edging higher but without breaking decisively, palm oil is in a wait‑and‑see phase. Traders are monitoring upcoming export figures, rival oilseed price moves, and weather developments in main producing regions for catalysts.
Unless there is a sudden shock in exports or a major weather disruption, the current gentle uptrend and mild contango are likely to persist, with limited downside as long as demand from food and energy sectors remains resilient.
Trading Outlook
- Producers: Consider layering in incremental hedges on Q4 2026–Q1 2027 contracts to lock in the current premium over nearby months while the curve remains in moderate contango.
- End‑users: Use dips towards the lower end of the 4,450–4,550 MYR/t range (≈935–955 EUR/t) in nearby contracts to extend coverage modestly, avoiding over‑commitment in case of future supply improvements.
- Spread strategies: The relatively flat but positive nearby‑deferred spreads may offer limited opportunities for curve trading; focus on calendar spreads around high‑liquidity months (Aug–Sep 2026) where adjustments to fundamentals will be reflected first.
3‑Day Directional View (Indicative, in EUR)
- MDEX Jun 2026: Sideways to slightly firmer, seen in a band around 940–960 EUR/t.
- MDEX Aug 2026: Mildly bullish bias, targeting roughly 955–975 EUR/t if buying interest persists.
- MDEX Jan 2027: Stable with an upward tilt, likely holding near 975–990 EUR/t, supported by contango and forward hedging demand.