Palm Oil Futures Slip as Record Stocks Clash with Strong Exports

Malaysian palm oil futures are retreating as expectations of record-high inventories and uncertainty over export duty relief outweigh support from strong export flows. Benchmark January futures recently fell by about 1.2%, reflecting growing concern that stocks could approach 3.75–3.8 million tonnes even as shipments accelerate. After a strong run earlier in the year, the market has pivoted back to oversupply worries. September Malaysian palm oil stocks already hit a record 3.51 million tonnes, and fresh industry estimates now point to another sizeable build in October despite a sharp jump in exports. Futures are trading below recent highs around MYR 4,700 per tonne as traders await the Malaysian Palm Oil Board (MPOB) report on November 10 and possible government action on crude palm oil (CPO) export duty. Indonesia’s cut in its own export levy further intensifies competition for price‑sensitive buyers.

Prices

Malaysian palm oil futures have softened, with the January contract down roughly 1.21% to around US$1,184 per tonne based on the latest session, mirroring declines in nearby months on Bursa Malaysia Derivatives. This pullback aligns with broader weakness in edible oils and energy markets, which reduces palm oil’s attractiveness as a biodiesel feedstock.     

Prices are now consolidating below MYR 4,700 per tonne, having tested support near MYR 4,500 as traders price in heavier stocks and the absence of a confirmed Malaysian export duty waiver. A weaker ringgit and firmer crude oil at times have limited the downside, but sentiment remains fragile ahead of the next MPOB data and ongoing policy discussions.       

Supply & Demand

Malaysia sits on record inventories after September palm oil stocks surged 24.5% month-on-month to about 3.51 million tonnes, driven by a 16.5% jump in crude palm oil production and softer exports. Industry and poll-based estimates now suggest October end-stocks could climb further toward roughly 3.75–3.81 million tonnes, confirming an oversupplied domestic balance despite stronger export demand.  

On the demand side, exports have rebounded strongly, with cargo surveyors reporting monthly shipment gains of roughly 40–70% in October, supported by pre‑Diwali buying from India and steady interest from other key destinations. Nevertheless, elevated prices and abundant availability of rival oils have encouraged some price-sensitive buyers to diversify away from palm, partially diluting the impact of stronger shipments.

Fundamentals & Policy

The core fundamental driver is the expected further build-up in Malaysian stocks amid peak seasonal production. Market participants now anticipate inventories around 3.75–3.76 million tonnes, with some estimates slightly higher, reinforcing concerns that storage capacity in key producing regions is becoming tight and that mills may struggle to clear output if offtake slows.

Industry groups have therefore called for temporary relief from Malaysia’s 10% CPO export duty to improve competitiveness and accelerate stock drawdown. As of early November, the government is still reviewing these proposals and has not announced a suspension, keeping an element of policy risk firmly in the market. Meanwhile, Indonesia has already cut combined export duty and levy by about 20% through a lower reference price, sharpening regional competition for export demand.

Weather & Production Outlook

Weather conditions in Malaysia and Indonesia remain broadly supportive of near-term production, with no major disruptions reported in the past weeks. This underpins expectations that output will stay seasonally high into year-end, potentially keeping inventories elevated unless exports remain exceptionally strong.

Looking into 2027, most medium-term projections still assume relatively robust yields compared with historical averages, suggesting that without a demand acceleration or meaningful biodiesel-driven absorption, stock rebuilding could persist. Any shift toward less favourable weather or stronger biodiesel mandates would be key bullish catalysts to monitor.

Trading Outlook

• Short-term bias remains mildly bearish to sideways as long as Malaysian stocks are seen rising toward or above the 3.75 million tonne mark and no export duty relief is confirmed.
• Downside risk is cushioned by strong October exports and support from energy markets; sharp breaks below recent support zones may attract commercial buying and short-covering.
• Upside potential hinges on a policy surprise (temporary CPO duty suspension), a softer production profile, or a renewed rally in rival oils and crude that would improve palm oil’s relative value.

3-Day Directional Outlook (Key Exchanges)

• Bursa Malaysia CPO futures (nearby & Jan): Bias for range-bound to slightly softer trade, with selling interest on rallies while the market waits for MPOB’s November 10 report and any clarity on export duty changes.
• International edible oil complex (soy/soft oils benchmarks): Expected to trade mixed; any renewed weakness would cap palm oil, while a bounce could offer limited short-term relief to CPO futures.