Palm Oil Market in Focus: Price Pressure Mounts Amid Global Oilseed Shifts

The palm oil market is navigating a period marked by elevated volatility, with fundamental shifts in both global supply and demand dynamics exerting increased pressure on prices. The latest trading activity on the Malaysian Derivatives Exchange (MDEX) highlights a notable softening across all active palm oil contracts, reflecting not only internal sector developments but also decisive moves in the broader oilseed complex.

In the short term, robust US soybean crushing and burgeoning South American exports continue to shape trader sentiment and provide a dynamic background for palm oil pricing. Meanwhile, favorable weather trends in key South American regions suggest an imminent influx of oilseeds on world markets, further weighing on the palm complex. In this environment, palm oil finds itself in a global contest for price competitiveness, pressured on multiple fronts but also presenting tactical opportunities for informed market participants.

📈 Prices

Contract Month	Closing Price (MYR/t)	Change	Change (%)	Volume
Mar 26	4013	-24	-0.60%	1,146
Apr 26	4020	-30	-0.75%	7,123
May 26	4016	-30	-0.75%	18,442
Jun 26	4011	-29	-0.72%	4,375
Jul 26	4008	-27	-0.67%	3,691
Aug 26	4002	-27	-0.67%	1,836
Sep 26	4007	-18	-0.45%	2,740
Oct 26	4004	-15	-0.37%	601
Nov 26	4001	-21	-0.52%	352
Dec 26	3999	-21	-0.53%	51

• All major contracts closed lower, with losses ranging from -0.37% to -0.75%.
• High trading volumes, especially in May and April contracts, signal liquidity and active positioning.
• Market sentiment: Bearish in the near term due to oversupply signals in the wider oilseed market.

🌍 Supply & Demand

• US soybean crushing reached a record January high, reinforcing strong domestic meal demand and triggering a rise in soybean oil stocks—dampening the price outlook for the broader vegoil sector, including palm oil.
• South American soybean exports, especially from Brazil, are set to surpass previous years by a significant margin (Feb export forecast: 11.46 Mt, approx. 5 Mt above last year), intensifying competition and putting downward pressure on palm oil prices.
• Ample supplies from Brazil and Argentina are expected to limit the upside for palm oil, as importers shift towards cheaper, readily available alternatives.

📊 Fundamentals

• Palm oil is under direct pressure from robust soybean oil supplies and high inventory accumulation in the US.
• The USDA’s upcoming acreage estimates anticipate an expansion in US soybean planting for 2026 (median estimate: 84.9 million acres vs last year’s 81.2 million), pointing to continued heavy supply prospects for the competing oilseed market.
• Barring unexpected weather or geopolitical events, the global oils and fats sector is entering a period of looser fundamentals.

🌦 Weather Outlook

• South America: Predominantly dry conditions forecast for Argentina, southern Brazil, and Paraguay in March—expected to favor maize and soybean harvests, supporting high export availability.
• Central Brazil: Some minor delays from wet fields possible, but no major disruptions projected.
• For Southeast Asia (palmoil’s core production region): Weather signals are near normal, although palm production seasonality peaks may bring extra supply in Q2.

🌍 Global Stocks & Production

• Malaysia and Indonesia remain the largest exporters of palm oil, but are facing stiff headwinds from soaring South American soybean oil exports.
• High US and Brazilian inventories, paired with active export programs, emphasize a globally competitive, well-supplied oils market.
• Traditional importing countries (India, China, EU) have increased options due to competitive pricing and abundant offers from both palm and competing oils.

📆 Outlook & Trade Recommendations

• Bearish momentum to persist in the short term as supply growth in soy oil and ample South American exports overshadow palm fundamentals.
• Importers: Consider gradual accumulation strategies on dips, as competition may force short-term price overshoots to the downside.
• Exporters/Producers: hedge near-term sales and manage inventory actively; watch for shifts in weather and trade policy which could trigger volatility.
• Speculators: Opportunities remain on the short side, but monitor positioning as fundamentals are approaching oversold territory.

📅 3-Day Regional Price Forecast (MDEX)

Date	Expected Price Range (MYR/t)	Sentiment
Day 1	3990 – 4020	Bearish
Day 2	3980 – 4010	Bearish
Day 3	3970 – 4000	Stabilization risk

Near-term downside bias remains but watch for possible short covering if technical supports are reached.