Palm Oil Futures Edge Higher While EU Demand Softens and Weather Risks Build

Mild gains in Malaysian palm oil futures contrast with structurally softer EU demand and shifting trade flows toward South America and Asia, leaving prices supported near term but vulnerable to policy and weather headlines.

Recent trading on the Malaysian derivatives market shows a modest upward bias in nearby palm oil contracts, supported by firmer crude oil and lingering supply risks, while forward curves remain slightly lower on expectations of adequate medium‑term supply. At the same time, EU imports of palm oil and competing oilseeds continue to trend down, as policy shifts and changing biodiesel economics reshape global demand. Logistic bottlenecks in South America and volatile crude oil markets add uncertainty to vegetable oil pricing, keeping palm oil trapped in a range rather than breaking into a clear trend.

📈 Prices & Forward Curve

Crude palm oil futures on the Malaysian exchange firmed slightly on 25 March 2026. The April 2026 contract settled at 4,512 MYR/t (+0.20% day-on-day), with May and June 2026 at 4,551 and 4,541 MYR/t respectively, also posting small gains. Further along the curve, prices ease gradually towards 4,403 MYR/t for November 2026 and around 4,329 MYR/t for May 2027, before stabilising near 4,171 MYR/t for the most distant listed contracts (2028–2029), indicating a mildly backwardated-to-flat structure.

Converted to euros (using an indicative 1 EUR ≈ 5 MYR), front-month values are trading around 900–910 EUR/t, with late‑2026 positions closer to 880–890 EUR/t and long‑dated values near 830–840 EUR/t. The slight day-on-day increases in the nearby months signal cautious buying interest after recent declines in more deferred contracts, which had seen daily losses of around 1.1–1.3% late last week.

Contract	Settlement (MYR/t)	Approx. Price (EUR/t)	Daily Change
Apr 2026	4,512	≈ 902 EUR/t	+0.20%
May 2026	4,551	≈ 910 EUR/t	+0.20%
Aug 2026	4,486	≈ 897 EUR/t	+0.09%
Nov 2026	4,403	≈ 881 EUR/t	-0.09%
May 2027	4,329	≈ 866 EUR/t	-1.16%

🌍 Supply, Competing Oils & Demand Shifts

Global vegetable oil markets remain closely tied to energy prices. Recent geopolitical tensions in the Middle East briefly pushed crude oil higher on fears of a broader regional conflict, before prices eased again as potential negotiations with Iran were reported. This volatility in crude oil underpins palm-based biodiesel economics but has not yet translated into a sustained rally, keeping palm oil largely range‑bound.

On the oilseed side, growing Brazilian soybean supplies are weighing on Chicago prices and drawing global demand towards South America. Large Brazilian export volumes, despite logistical bottlenecks and delays, increase availability of soyoil and soymeal, intensifying competition for palm oil in key importing regions. In the US, soybean exports are running 27% behind last season’s pace, underlining how trade flows are rebalancing toward Brazil.

In the EU, soybean imports up to 22 March reached 8.92 million tonnes, 11% below last year. Rapeseed imports fell even more sharply, down 33% year-on-year to 3.37 million tonnes. Soymeal arrivals declined by 4% to 13.23 million tonnes, while palm oil imports were little changed at 2.11 million tonnes, only 1% below the previous year. This indicates slightly softer, but broadly stable EU palm oil demand compared with steeper reductions in other oilseed imports.

📊 Policy, Sustainability & EU Market Context

EU demand for palm oil is increasingly shaped by sustainability and biofuel regulations. The ongoing phase‑down of palm‑based biodiesel in the EU’s renewable energy framework and the rollout of stricter deforestation‑free product rules are contributing to structurally lower import needs over time, even if short‑term volumes remain near last year’s levels. Recent EU trade monitoring points to a continued decline in palm oil inflows since 2020, especially for energy uses, while food and oleochemical demand is more resilient.

This policy backdrop limits the upside for palm oil in the European market, even when price competitiveness against soyoil improves. For producing countries, stricter EU sustainability requirements and traceability obligations increase compliance costs but also encourage a shift towards certified supply chains. In the medium term, this could support price differentials between certified and non‑certified product, especially into high‑regulation destinations.

☁️ Weather & Regional Outlook

Weather in Southeast Asia remains a key risk factor. Short‑term disruptions, such as recent flood events reported in parts of Malaysia’s main producing regions, remind markets of how quickly production can tighten. While current futures pricing implies no immediate supply shock, any confirmation of sharply lower output would likely support nearby contracts relative to deferred months.

At the same time, seasonally improving field conditions later in the year could stabilise yields, aligning with the slightly softer forward curve into 2027–2028. For now, the market is balancing these weather‑related upside risks against the weight of abundant South American soy supplies and only modest growth in import demand from Europe.

📆 Trading & Risk Management Outlook

• Producers: Consider incremental hedging on late‑2026 and 2027 positions, where the curve trades below nearby values, to lock in historically attractive MYR/EUR levels while demand risks in the EU remain skewed to the downside.
• Refiners & buyers: Use current modest backwardation to secure coverage for Q3–Q4 2026, but keep some flexibility for spot purchases in case Brazilian soyoil pressure intensifies and drags palm oil lower.
• Traders: Monitor the palm–soyoil spread and crude oil price swings; short‑term opportunities are likely to come from relative value trades rather than large directional bets in palm alone.

📍 3-Day Directional Price Indication (EUR/t)

• MDEX front month (CPO, Apr 2026): Around 900–915 EUR/t, with a slight upward bias if crude oil firms again.
• MDEX Q3 2026 strip: Around 890–900 EUR/t, expected to trade sideways to mildly higher on any fresh supply disruptions in Malaysia or Indonesia.
• Deferred 2027 positions: Around 860–875 EUR/t, likely stable, capped by soft EU demand and strong South American oilseed availability.