MDEX palm oil futures eased as strong Malaysian exports to India meet heavy soy, rapeseed and canola supplies and an approaching El Niño-driven weather risk.
Prices
MDEX crude palm oil futures fell across the curve on October 2, 2026. Nearby October 2026 settled at MYR 4,332 per tonne, down MYR 42 or 0.97% on the day. The actively traded November 2026 contract closed at MYR 4,411 (‑1.13%), while December 2026 finished at MYR 4,503 (‑1.13%). Further out, January 2027 printed MYR 4,593 (‑1.28%).
The downside extended into the more deferred months: February 2027 settled at MYR 4,680 (‑1.39%), March 2027 at MYR 4,763 (‑1.49%) and April 2027 at MYR 4,836 (‑1.59%). Contracts through September 2027 were all lower by around 1.2–1.5%. Thinly traded 2028–2029 contracts also marked down by about 2%, signaling broad profit‑taking and some unwinding of longer‑term weather premiums.
| Contract | Settlement (MYR/t) | Daily change (MYR) | Daily change (%) | Volume (lots) |
|---|---|---|---|---|
| Oct 2026 | 4,332 | -42 | -0.97% | 293 |
| Nov 2026 | 4,411 | -50 | -1.13% | 2,790 |
| Dec 2026 | 4,503 | -51 | -1.13% | 9,676 |
| Jan 2027 | 4,593 | -59 | -1.28% | 6,496 |
| Feb 2027 | 4,680 | -65 | -1.39% | 5,139 |
Supply & Demand
Malaysia’s export side remains a key support. Shipments to India in 2026 have already exceeded 2.26 million tonnes, roughly 40% above the same period last year, as India continues to import about two‑thirds of its vegetable oil needs and Malaysia steps up flows of higher‑value palm products. Overall Malaysian palm oil exports in the first eight months of the year grew by about 8.4%, with production at 12.6 million tonnes and full‑year exports expected near 16 million tonnes.
At the same time, the broader vegetable oil complex is turning more comfortable. Chinese soybean inventories at major crushers climbed to around 7.96 million tonnes by late September, the highest in at least 15 years, while many processors are covered with South American supplies and state reserves well into early February. Crushing margins for US and Brazilian beans in China are negative, and additional US tariffs keep US beans less competitive, pressuring Chicago soy futures and indirectly capping palm oil’s upside as competing oils cheapen. On the oilseed side, Argentina may harvest up to 53.6 million tonnes of soybeans in 2026/27 according to the Buenos Aires Grain Exchange, materially above last season and some other forecasts, which would add further global oil supply and weigh on vegetable oil prices if realized.
Rapeseed and canola dynamics also lean bearish for palm. Canada has sharply revised its 2026/27 canola ending stocks higher to about 1.98 million tonnes, from 1.50 million tonnes previously, and also lifted prior‑season inventories. As one of the world’s key canola exporters, larger Canadian carry‑out reinforces expectations of ample global soft‑oil availability and competes with palm in some destination markets, adding to the pressure seen in palm futures.
Weather & Production Outlook
For now, palm oil production in Malaysia has been seasonally firm. Output in the first eight months reached 12.6 million tonnes, and officials expect full‑year production and exports in 2027 to remain broadly stable despite higher freight, energy and insurance costs. However, early indicators of weather stress are emerging. Malaysian estate yields for fresh fruit bunches in January–August 2026 averaged slightly below last year, and fire hotspots in both Malaysia and Indonesia have risen, pointing to drier conditions.
Meteorological agencies now see a probability above 90% that El Niño reaches a very strong, potentially “super” phase between October and December 2026. Experience from past episodes suggests the impact on palm yields will lag by several months, with the main production hit likely in 2027 rather than this year. Until then, near‑term supply is expected to remain relatively stable, keeping the market focused on demand swings and competing oil trends while gradually re‑pricing longer‑dated weather risks.
Fundamentals & Cross‑Market Links
- China’s soybean complex: Record‑high soy inventories, weak crush margins and additional import tariffs on US origin reduce Chinese oilseed import appetite near term, softening demand for soybean oil and dragging on the broader vegetable oil complex.
- South American soybeans: Argentina’s potential rebound to above 50 million tonnes of soybeans in 2026/27 would add significant export availability of both beans and oil, heightening competition for palm in price‑sensitive markets.
- Rapeseed & canola: Canada’s higher canola stocks underline a more comfortable outlook for rapeseed oil, further limiting palm’s ability to sustain rallies unless and until El Niño visibly constrains Southeast Asian palm output.
- Biodiesel policies: Indonesia’s elevated biodiesel blending mandates continue to underpin domestic palm oil use, while India’s import‑reliant edible oil sector keeps external demand for Malaysian palm robust ahead of the peak festival season.
Trading Outlook
- Producers / sellers: Use current levels above MYR 4,300–4,500 per tonne on the MDEX to incrementally hedge Q4 2026 and Q1 2027 sales, as richer global oilseed and canola supplies and soft soy prices pose downside risk if Indian demand underperforms.
- Consumers / refiners: Consider layering in coverage on price dips for late‑2026 and early‑2027 delivery, balancing near‑term softness in the vegetable oil complex against a rising probability of El Niño‑driven supply tightness materializing from mid‑2027 onward.
- Speculative participants: Short‑term bias leans mildly lower after the recent 1–1.5% pullback across the curve, but with a preference to take profits on deeper corrections given the asymmetric upside should weather or biodiesel demand tighten the market faster than expected.
3‑Day Directional View (MDEX CPO)
- Kuala Lumpur (MDEX) nearby contracts: Slightly bearish to sideways over the next three sessions, with trade likely to consolidate after the latest decline as participants digest export data and monitor developments in soy and canola markets.