Palm Oil Market Analysis: Prices Retreat on Profit-Taking Amid Rising Stocks and Robust Export Flows

Malaysian palm oil futures have entered a period of high volatility in June 2025, marked by profit-taking, uncertain global demand, and a looming seasonal supply surge. While strong export flows—particularly to India and China—provided some buoyancy, the market has started to adjust downward following consistent gains and the influence of external edible oil and energy markets. Recent data from the Bursa Malaysia Derivatives Exchange (MDEX) showed declines across near and deferred contracts, with most benchmarks slipping between 0.3% and 0.5% in a single session. This pullback has been largely attributed to traders locking in profits after several strong sessions, as well as rising inventories and the seasonal upswing in Southeast Asian production.

The broader vegetable oil market context is bearish: global stocks are rebuilding, and USDA, MPOB, and Oil World data suggest palm oil supply will outpace demand in the coming quarters. Notably, Malaysian May production surged nearly 13.5% year-on-year, and stocks may approach the psychologically important 1.8 million ton mark by June’s end. Despite these oversupply concerns, economic and weather risks remain; monsoon rains in Malaysia and Indonesia support crop development but could disrupt logistics.

Speculators remain active, recently increasing their long positions, yet the market remains nervous with profit-taking dominating sentiment. The outlook for edible oils is mixed, with crude oil’s weakness undercutting support for palm-based biodiesel production. In sum, both upside and downside risks persist, and strategies will hinge on the next export and supply data releases.

📈 Prices: Latest Palm Oil Futures Overview

Contract	Closing Price (MYR/t)	Weekly Change	Change (%)	Market Sentiment
Jul 25	4,079 MYR/t	-17	-0.42%	Soft/Bearish
Aug 25	4,086 MYR/t	-18	-0.44%	Soft/Bearish
Sep 25	4,077 MYR/t	-17	-0.42%	Soft/Bearish
Oct 25	4,060 MYR/t	-20	-0.49%	Weak
Nov 25	4,052 MYR/t	-21	-0.52%	Weak
Dec 25	4,060 MYR/t	-18	-0.44%	Weak

• Market sentiment: Softening after a technical rebound; minor contracts saw mild gains due to thin liquidity late in the curve.

🌍 Supply & Demand Drivers

• Production Surge: Malaysian May palm oil production up 13.5% y/y, hitting 1.75 million tons. Indonesia and Malaysia output both robust, outpacing seasonal norms.
• Rising Stocks: End-May Malaysian palm oil stocks estimated at 1.75–1.80 million tons, with export flows only partially absorbing the supply shock.
• Export Trends: Indian and Chinese imports remain strong, but profitability is eroding as the palm-soybean oil price spread narrows.
• Competition from Rivals: Large South American soy oil harvest and steady sunflower oil prices temper palm oil’s export competitiveness.
• Policy & Speculation: Indian import policy adjustments and speculative profit-taking influence short-term price action.

📊 Fundamentals: Production, Stocks, & Global Trade

Country	2024/25 Palm Oil Output (m t)	End Stocks (m t)	2023/24 Output (m t)
Indonesia	48.2	3.4	47.6
Malaysia	19.2	1.8	18.8
Other Asia	7.5	0.3	7.3
World	79.8	5.5	79.1

• Stocks trend: Global palm oil inventories are projected to increase slightly into Q3 2025 unless adverse weather disrupts harvests or demand recovers sharply.

🌦️ Weather Outlook & Crop Impact

• Malaysia: Continued regular monsoon rainfall supports palm fruit development. Field reports confirm healthy crop stands and generally benign weather, with no El Niño disruptions.
• Indonesia: Stable with some wetter-than-average patches, indicating another strong production month ahead. Fieldwork delays possible near rivers but yields remain solid.
• Impact: Weather is neutral to supportive and does not present a significant risk for yield or logistics in June, so supply builds are likely to persist.【6:8†full-posts-2025.json】【6:19†full-posts-2024.json】

🔎 Global Production & Stock Overview

Exporter	Production (m t, 2024/25)	Stocks (m t)
Indonesia	48.2	3.4
Malaysia	19.2	1.8

India: Major importer, likely to maintain strong demand above 0.75 million t/month if current price competitiveness persists.

💡 Trading Outlook & Recommendations

• Wait for confirmation of baseline support near 4,050–4,100 MYR/t for Aug–Oct contracts before entering new long positions.
• Sellers should hedge downside risk given elevated inventories and high production, especially into the seasonal peak (Jul–Sep).
• Monitor Indian import policy, as further tariff reductions could fuel temporary export rallies.
• Cross-check with soyoil and sunflower oil trends; sharp moves in Chicago or Dalian contracts may spill over.
• Export data from port authorities is the next key market-moving variable – strong flows can support a rapid rebound.

📆 3-Day Regional Price Forecast (MDEX, MYR/t)

Date	Expected Range (MYR/t)	Outlook
June 18	4,050 – 4,090	Neutral/Sideways
June 19	4,040 – 4,110	Soft/Sideways
June 20	4,030 – 4,110	Rebound if export data surprises positively

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Overall, the palm oil market is softening but remains highly sensitive to export and weather updates. Seasonal production gains may cap rallies, while any supply disruption or bullish surprise in demand could enable a rapid price bounce. Stay vigilant on weekly data and policy headlines.