The palm oil market currently finds itself at a crossroads, with bearish signals emerging from rising Malaysian inventories, even as improved June export data provides a degree of support. After two consecutive sessions of gains, Malaysian palm oil futures reversed course, pressured by data showing May’s stockpiles hitting their highest level in eight months.
The market mood is further shaped by seasonal factors, currency fluctuations, weather uncertainty in Southeast Asia, and renewable-driven demand expectations from major importers such as India and China. Trade flows in the immediate term reflect caution; however, increased export activity and supportive weather outlooks could provide a counterbalance. This analysis delves into the latest futures pricing, key supply and demand data, market fundamentals, and actionable trading recommendations for market participants.
📈 Prices: Key MDEX Palm Oil Futures
| Contract | Closing Price (MYR/t) |
Change | % Change | Date | Sentiment |
|---|---|---|---|---|---|
| Jun 25 | 3,876 | -44 | -1.14% | 10.06.2025 | Bearish |
| Jul 25 | 3,871 | -1 | -0.03% | 11.06.2025 | Neutral |
| Aug 25 | 3,868 | +4 | +0.10% | 11.06.2025 | Neutral |
| Sep 25 | 3,861 | 0 | 0.00% | 11.06.2025 | Neutral |
| Oct 25 | 3,864 | +5 | +0.13% | 11.06.2025 | Neutral |
| Nov 25 | 3,865 | +4 | +0.10% | 11.06.2025 | Neutral |
| Dec 25 | 3,876 | +5 | +0.13% | 11.06.2025 | Neutral |
🌍 Supply & Demand Drivers
- Stocks: Malaysian palm oil reserves increased for a third consecutive month, reaching an 8-month high. This inventory growth exerts downward pressure on prices as supply outpaces immediate demand.
- Exports: Preliminary June data from cargo surveyors points to a robust rise in export volumes, mitigating some of the bearishness from stock accumulation.
- Production: Output has seasonally increased, but ongoing labour shortages and logistical hiccups could moderate further supply growth.
- Imports and Global Flows: India and China remain major demand centres; recent weakness in the ringgit could enhance Malaysia’s competitive edge in global markets.
- Related Oils: Fluctuations in soyoil and sunflower oil prices continue to influence palm oil’s relative attractiveness.
📊 Fundamentals Snapshot
- USDA Reports: Recent releases show global vegetable oil inventories at comfortable levels, with expectations of only modest demand growth through the remainder of the year.
- Speculative Activity: Positioning has turned mixed, with some unwinding of long speculative bets after the stocks report.
- Inventories Comparison: Indonesia’s stocks remain stable; Malaysia sees a notable uptick; India is drawing down reserves after recent import surges.
- Policy Factors: Biodiesel mandates in Indonesia and Malaysia support baseline consumption, but uncertainties around EU sustainability policies present future risk.
⛅ Weather Outlook for Key Regions
- Malaysia & Indonesia: Seasonal rainfall is near average, and no significant El Niño or La Niña disruptions are currently forecast for the next few weeks. Adequate moisture supports near-term yield expectations.
- India: The southwest monsoon has arrived on schedule, improving import demand expectations for edible oils.
- Watchlist: Monitor for unseasonal rains or dry spells, which could impact fruit formation and harvest pace.
🌐 Global Production & Stock Comparison
| Country | Production (2024/25, est, ‘000 t) | Ending Stocks (2024/25, est, ‘000 t) |
|---|---|---|
| Malaysia | 19,100 | 2,550 |
| Indonesia | 48,000 | 3,800 |
| India (imported) | ~700 | 1,100 |
| EU-27 | 2,100 | 500 |
| China (imported) | ~6,700 | 1,650 |
📆 Trading Outlook & Recommendations
- Short-term pressure is likely to continue due to high stocks unless export demand further accelerates in June.
- Watch for updated monthly trade data and further government policy changes, especially regarding biodiesel mandates and import tariffs.
- Monitor weather developments for any sign of crop stress in Malaysia and Indonesia.
- Opportunistic buying may arise if prices dip closer to support near MYR 3,800/t or if stronger export numbers are confirmed mid-month.
- Producers should consider hedging forward production given inventory trends and currency risks.
🔮 3-Day Regional Price Forecast (MDEX, MYR/t)
| Date | Forecast Range | Market Sentiment |
|---|---|---|
| 12.06.2025 | 3,840 – 3,880 | Neutral/Bearish |
| 13.06.2025 | 3,820 – 3,870 | Bearish |
| 14.06.2025 | 3,810 – 3,860 | Bearish |
