Malaysian Palm Oil Market: Rally Stalls as Profit-Taking and Weak Crude Oil Weigh

The Malaysian palm oil market has experienced a dynamic week, with futures rallying for five consecutive sessions before succumbing to profit-taking ahead of the weekend. Strong demand from China and robust export figures have underpinned prices, but a notable pullback on Friday highlights the market’s sensitivity to external drivers. This volatility comes amid a backdrop of declining crude oil prices, which directly affect the appeal of palm oil for biodiesel production.

As the world’s most traded vegetable oil, palm oil is highly reactive to shifts in global edible oil demand, energy markets, and weather conditions in major producing regions like Malaysia and Indonesia. Currently, the market is balancing between bullish export momentum and the bearish undertone from energy markets, while traders keep a close eye on weather forecasts that could impact yields in the months ahead. This report provides a comprehensive analysis of the latest price movements, supply and demand fundamentals, weather outlook, and actionable trading recommendations for market participants.

📈 Prices & Market Sentiment

Contract	Close (MYR/t)	Weekly Change	Sentiment
Jun 25	3,909	-0.51%	Neutral/Bearish
Jul 25	3,911	-0.79%	Bearish
Aug 25	3,903	-0.74%	Bearish
Sep 25	3,897	-0.62%	Bearish
Okt 25	3,891	-0.72%	Bearish

 

ICE Brent Crude Oil	Close (USD/bl)	Weekly Change	Sentiment
Jul 25	64.01	-1.39%	Bearish
Aug 25	63.26	-1.68%	Bearish
Sep 25	62.61	-1.79%	Bearish

🌍 Supply & Demand Drivers

• Export Demand: Recent data shows Malaysian palm oil exports rising, with China and India leading purchases. This export strength has supported prices despite broader commodity weakness.
• Energy Markets: Falling Brent crude oil prices reduce the competitiveness of palm oil as a biodiesel feedstock, weighing on market sentiment.
• Speculative Activity: Funds have increased long positions following the export-driven rally, but profit-taking is now evident as technical resistance is tested.
• USDA & MPOB Reports: The latest Malaysian Palm Oil Board (MPOB) data points to tighter stocks, but upcoming USDA oilseeds reports could shift market expectations.

📊 Fundamentals

• Production: Malaysian and Indonesian output is seasonally rising, but concerns linger over El Niño-related dryness potentially impacting yields in late 2025.
• Inventories: Stocks remain below last year’s levels, supporting the market, but could rebuild if export momentum slows.
• Competing Oils: Soyoil and sunflower oil markets have been steady, limiting substitution-driven moves for now.

⛅ Weather Outlook

• Malaysia: Forecasts indicate scattered showers across key producing regions (Sabah, Sarawak) for the next 3 days, which should support palm development and mitigate drought fears.
• Indonesia: Similar rainfall patterns are expected, with no immediate weather threats reported.
• El Niño Watch: Meteorological agencies maintain a watch, but the immediate risk to palm yields appears limited.

🌐 Global Production & Stocks

Country	2024/25 Production (Mt)	2024/25 Stocks (Mt)
Malaysia	19.0	1.7
Indonesia	49.0	3.0
India (Import)	0.6	1.2
China (Import)	0.5	1.1

📆 Trading Outlook & Recommendations

• Short-term correction is likely as profit-taking dominates and crude oil prices remain weak.
• Watch for further export data from Malaysia and China for signs of renewed buying interest.
• Weather remains a key wildcard—unexpected dryness could quickly reverse bearish sentiment.
• Longer-term, stocks remain supportive, but any demand slowdown or further energy market weakness could trigger deeper corrections.
• Traders should consider trailing stop-losses on long positions and look for re-entry if prices approach key support near 3,850 MYR/t.

🔮 3-Day Regional Price Forecast (MDEX)

Date	Forecast (MYR/t)	Bias
31 May 2025	3,890–3,930	Soft Bearish
1 Jun 2025	3,880–3,920	Bearish
2 Jun 2025	3,870–3,910	Bearish