Palm Oil Futures Rally on MDEX but Forward Curve Signals Cautious Optimism

Palm oil futures on the Malaysian exchange extended their upward move on 19 June, with front contracts gaining around 1.5–1.8%, but the forward curve remains only mildly backwardated, pointing to firm but not yet tight fundamentals. In EUR terms, nearby values are approaching the 900 EUR/t mark, keeping palm oil competitively priced versus alternative vegetable oils. After several sessions of steady gains, the palm oil market is consolidating a moderate uptrend. The entire 2026–2027 strip settled higher day-on-day, with gains gradually decreasing along the curve. This structure suggests solid nearby demand and lingering concerns over supply risks, while medium‑term expectations remain more balanced. With no extreme moves in volume and an orderly curve shape, the market currently prices in firmness rather than panic, leaving room for weather and competing-oil dynamics to determine the next leg.

Prices

The benchmark July 2026 MDEX palm oil contract settled at 4,594 MYR/t on 19 June, up 84 MYR or 1.83% on the day. August closed at 4,622 MYR/t (+1.69%), and September at 4,646 MYR/t (+1.57%), confirming a synchronized rally across the nearby months.

Using an indicative rate of 1 MYR ≈ 0.195 EUR, July equates to roughly 896 EUR/t and August to around 901 EUR/t. This keeps palm oil in a firm but not extreme price band by recent standards and maintains a discount to many softseed oils, underpinning demand from food and biodiesel sectors.

Supply & Demand Structure

The MDEX forward curve shows modest backwardation from Jul 2026 (4,594 MYR/t) to Jan 2027 (4,728 MYR/t) and a gentle easing into late 2027–2028, where prices cluster just below 4,600 MYR/t. Day-on-day gains narrow from +1.8% in the front month to around +0.6% in the outer 2027–2028 positions.

This pattern signals relatively stronger nearby demand and some concern about short-term availability, while the market does not yet anticipate a prolonged structural deficit. The orderly curve and broad participation (notably strong volume in Sep 2026 at around 28,500 lots) suggest commercial hedging interest rather than purely speculative spikes.

Fundamentals & Weather Context

Current pricing implies that traders are factoring in seasonal production risks in Southeast Asia, including potential yield variability during the second half of 2026. At the same time, the absence of a steeper backwardation indicates that expectations for overall 2026/27 output remain reasonably stable, with no clear evidence of a severe supply shock being priced in yet.

On the demand side, the consistent uplift across all listed 2026 contracts points to steady offtake from food, oleochemical and biodiesel segments. The price level around 900 EUR/t keeps palm oil competitive versus higher-priced alternatives, likely supporting discretionary demand where feedstock substitution is feasible.

Short-Term Outlook & Trading View

Near term, the market appears biased to the upside as long as front-month prices hold above the recent breakout area around 4,500 MYR/t. The smooth curve and moderate daily gains suggest further appreciation is likely to be incremental rather than explosive, unless fresh weather or policy headlines emerge.

• Producers: Consider scaling in additional hedges in the Sep–Dec 2026 window after the recent rally, locking in near-4,650–4,700 MYR/t levels while retaining some upside via options if available.
• Consumers: Use current backwardation to secure part of Q4 2026 and early 2027 needs; stagger purchases to benefit if prices consolidate back toward 4,500 MYR/t.
• Traders: The gently backwardated curve favors roll-yield strategies on the long side; watch volumes and any steepening of nearby spreads as an early signal of tightening fundamentals.

3-Day Directional Indication (Key Exchanges)

• MDEX Palm Oil Futures (all 2026 contracts, in EUR terms): Slightly firmer to sideways over the next three trading days, with nearby contracts expected to trade in a band roughly equivalent to 880–920 EUR/t.
• Forward Strip 2027–2028: Mild upward bias but with limited volatility, likely holding close to the equivalent of 880–910 EUR/t if no new fundamental shocks occur.