Firm MDEX Palm Oil Curve as Tight Malaysian Balance Supports Prices

MDEX palm oil futures remain firm with a mildly backwardated curve, supported by a tightening Malaysian balance sheet, robust biodiesel demand and higher export duties, while short-term export softness and competition from rival oils cap further upside.

Palm oil prices on the Bursa Malaysia Derivatives Exchange closed higher across the 2026–2027 strip on 24 April, with nearby contracts up modestly and deferred months posting stronger percentage gains. The structure signals a market that is tight in the prompt but increasingly concerned about medium-term availability amid strong domestic and regional biofuel mandates. At the same time, export flows have become more volatile, with March exports surging and early April shipments easing, leaving buyers cautious but still dependent on palm in key destinations such as India and North Africa. Elevated energy prices and policy-driven biofuel use continue to underpin the complex.

📈 Prices & Term Structure

MDEX crude palm oil futures settled slightly higher on 24 April 2026, with the benchmark July 2026 contract at 4,582 MYR/t (+0.07% day-on-day). Nearby months (May–September 2026) posted small gains of 0.07–0.43%, indicating steady but not explosive buying interest.

Further out, the curve shows more pronounced gains: contracts from November 2026 through November 2027 rose between 0.59% and 1.83%, pointing to firm medium-term price expectations despite currently adequate coverage. Very long-dated 2028–2029 contracts remain illiquid and last traded around 4,397 MYR/t with no new volume, offering limited price discovery.

Contract	Settle (MYR/t)	Approx. Price (EUR/t)	Daily Change
May 2026	4,513	~EUR 955	+0.18%
Jul 2026	4,582	~EUR 970	+0.07%
Nov 2026	4,605	~EUR 975	+0.59%
Jul 2027	4,544	~EUR 962	+1.83%

(EUR conversion assumes ~4.73 MYR/EUR, indicative only.) Recent external assessments also describe MDEX nearby values roughly in the EUR 950–980/t range, confirming the firmness of the current price band.

🌍 Supply & Demand Drivers

Fundamentally, the Malaysian balance has tightened over recent months. Latest industry data show March palm oil inventories dropping by about 16% month-on-month as exports surged more than 29% year-on-year in Q1 2026, led by strong buying from North Africa and South Asia. This drawdown underpins the current firmness in MDEX prices despite modest daily moves.

Looking ahead, policy shifts add further support. Malaysia’s higher May 2026 CPO reference price triggers a 10% export duty, raising landed costs for importers and effectively tightening exportable supply. At the same time, the country is moving toward higher biodiesel blends (targeting B15 from B10), which could absorb up to around 1–1.5 million tonnes annually and structurally reduce export availability. This is complemented by Indonesia’s plan to implement B50 by mid-2026, sharply increasing regional palm-based fuel use.

Demand-side signals are mixed in the very short term. After strong Q1 exports, cargo surveyors reported that Malaysian shipments in early April fell roughly 25–26% versus March, while India and China’s purchases dipped amid high outright prices and more competitive soybean oil offers. Nonetheless, structural demand from India remains robust, and North Africa and South Asia have emerged as important growth outlets. Elevated global energy prices and the wider fuel crisis are also pushing governments to lean more on domestically produced or regionally sourced biofuels, indirectly supporting palm oil usage.

📊 Fundamentals & External Influences

Global oilseed fundamentals continue to influence palm oil’s relative pricing. A strong South American soybean harvest and competitive soy oil values have capped palm’s upside in price-sensitive markets, especially India, although recent price action suggests palm is still set for its first weekly rise in three weeks. China, meanwhile, holds elevated stocks of both palm and soy oil, which may temper incremental demand in the near term.

On the supply side, Malaysian output remains constrained by structural issues such as labor availability and limited new land, while recent weather disruptions (e.g., floods in parts of Sabah) have further weighed on short-term production. Policy-driven increases in biodiesel mandates in both Malaysia and Indonesia, coupled with export duties and sustainability-linked access challenges in the EU, tilt the balance toward tighter exportable supplies over the medium term, even if month-to-month export data oscillate.

🌦 Weather Outlook (Key Growing Regions)

Short-term forecasts for major palm-growing regions in Peninsular Malaysia and Sumatra/Borneo point to generally warm, seasonally humid conditions over the next three days, with scattered showers but no immediate extreme events. This suggests no acute, weather-driven relief to the tight supply situation in the immediate term. Regional climate discussions continue to monitor El Niño/La Niña signals for late 2026–2027, but these are more relevant for medium-term yield risks than for the current pricing window.

📆 Trading & Risk Outlook

The current MDEX curve reflects a firm but not overheated market: nearby contracts trade in the high EUR 900s per tonne, while deferred values price in continued tightness but with some risk premium for policy and weather. The modest day-on-day gains, combined with stronger moves in deferred months, hint at growing concern about medium-term availability rather than an immediate supply shock.

🎯 Trading Recommendations (Short-Term)

• Producers (Malaysia/Indonesia): Use current nearby firmness (~EUR 950–980/t) to increase hedge coverage on Q3–Q4 2026 sales via MDEX, especially where physical margins are healthy and export duty exposure is high.
• Importers/Refiners (India, MENA, EU): Stagger purchases and consider partial coverage in deferred contracts before higher biodiesel mandates (B15/B50) and full impact of the 10% Malaysian export duty further tighten exportable supplies.
• Speculators: The combination of falling inventories, policy-driven demand and constrained production favors a cautiously bullish stance on the 2026–2027 strip, but positioning should respect the downside risk from competitive soy oil and any temporary export weakness.

📍 3-Day Directional Outlook (MDEX)

• Nearby MDEX (May–Jul 2026): Bias: sideways to slightly higher. Support from tight Malaysian stocks and rising biodiesel demand; resistance from weak early-April exports and rival oil competition.
• Deferred 2026 (Aug–Dec 2026): Bias: firm. Higher export duty and structural supply constraints likely keep prices near the upper end of the current EUR 950–990/t band.
• 2027 Strip: Bias: constructively bullish but illiquid. Any new weather or policy shock could move these contracts disproportionately due to thinner volume.