Palm Oil Futures Ease as Profit-Taking Meets Weather and Stock Risks

Palm oil futures have turned lower along the curve as profit-taking sets in after a recent rally, while the forward curve remains steeply backwardated, signalling continuing concerns about near-term supply and weather risks. After several sessions of weather- and energy-driven strength, the palm oil market is consolidating, with Bursa Malaysia and MDEX contracts slipping on September 9–10. Rising Malaysian stock estimates and slower export demand are softening sentiment, but a tight nearby balance, El Niño-related yield risks and stronger crude oil still provide a floor. Traders are now focused on fresh MPOB supply–demand data to gauge how far the correction can run and whether the bullish fundamental bias into late 2026 remains justified.

Prices

On September 10, 2026, MDEX crude palm oil futures weakened across actively traded months. Nearby September 2026 settled at MYR 4,660/tonne (-0.19% d/d), while the key November 2026 contract closed at MYR 4,928/tonne (-0.77% d/d). Further along the curve, January 2027 ended at MYR 5,165/tonne (-1.06% d/d) and March 2027 at MYR 5,293/tonne (-1.19% d/d), underlining a still pronounced backwardation from late 2026 into 2027.

These levels are broadly consistent with recent Bursa Malaysia settlements, where November 2026 closed at MYR 4,966–4,978/tonne over the past three sessions, with the market easing on profit-taking after a weather- and energy-led rally. The front physical CPO price for September South was last indicated around MYR 4,680/tonne. Converted at roughly 1 EUR = 5 MYR, this implies benchmark futures levels near EUR 930–1,060/tonne, depending on contract maturity.

Supply & Demand

Recent Malaysian data and analyst commentary point to rising stock levels into late summer. MPOB end-July stocks rose to about 1.66 million tonnes (+1% m/m), driven by a strong 18% jump in production and modest export gains. Market expectations now see end-August stocks climbing further towards 2.73–2.78 million tonnes, up 4–6% from July, amid softer destination demand and weaker exports.

Export demand has cooled as palm oil’s price spread over soybean oil has narrowed, redirecting some buying to rival vegoils. At the same time, congestion at Indian ports and high tank utilisation are delaying discharge and may temporarily cap new purchases by the world’s largest vegetable oil importer. This combination of higher stocks and logistical bottlenecks helps explain the recent pause in the palm oil rally despite ongoing weather concerns.

Fundamentals & Weather

Fundamentals remain broadly constructive despite the current price correction. Analysts highlight firm underlying demand, including biofuel usage, together with persistent supply-side risks linked to El Niño-related hot and dry conditions in Southeast Asia that could weigh on yields into 2027. Ongoing dry weather in key producing regions is already cited as a supportive factor for CPO futures, even as short-term export pace slows.

Short-term price action is heavily influenced by speculative flows and energy markets. Stronger crude oil prices and gains in soyoil on the Dalian and CBOT exchanges have recently lent support to palm oil, particularly the benchmark November 2026 contract, which earlier reached one of its highest closes of the year before the latest bout of profit-taking. With Malaysian export taxes and Indonesian reference prices set to adjust upwards if CPO benchmarks stay elevated, relative competitiveness between origins will be an important watchpoint for refiners and end-users.

Trading Outlook

Near-term sentiment is mildly bearish after the recent rally, but the structure of the curve and fundamental backdrop still suggest a constructive medium-term view for palm oil prices.

• Producers / Origin sellers: Use current pull-backs in nearby months (around EUR 930–980/t) to scale in incremental hedges for Q4 2026, while keeping some exposure open to benefit from potential weather- or energy-driven spikes.
• Refiners / End-buyers: Consider layering in coverage on dips for late 2026 and early 2027, as backwardation and El Niño risks argue against relying solely on spot purchases if stocks tighten faster than expected after the August data.
• Traders / Funds: Watch Thursday’s MPOB report closely; a stock build in line with or below expectations, combined with continued strength in crude oil and soyoil, could quickly re-ignite the bullish bias after the current profit-taking phase.

3-Day Directional View (Indicative, in EUR)

• MDEX front month (Sep 2026): Mild downside to sideways, roughly EUR 910–950/t, as profit-taking persists ahead of new MPOB data.
• MDEX Nov 2026 benchmark: Sideways with slight upside bias, around EUR 970–1,010/t, highly sensitive to the stocks print and external vegoil moves.
• Physical FOB Malaysia CPO: Expected to track futures with a small discount, broadly in the high EUR 800s to low 900s/t range, pending clearer signals on export demand and tax changes.