Palm Oil Supported by Vegetable Oil Rally and Strong MDEX Forward Curve
Palm oil futures edge higher with a firm forward curve, buoyed by surging crude oil and strength in soy/rapeseed. Read the concise price and trading outlook.
Prices
The MDEX palm oil strip on 24 July 2026 shows a firm, mildly upward-sloping structure. The August 2026 contract closed at 4,600 MYR/t, up 4 MYR on the day (+0.09%). Nearby contracts out to November 2026 gained around 20–24 MYR (about +0.4% to +0.5%), closing between 4,683 and 4,789 MYR/t. January–April 2027 values edged higher but with smaller gains, reinforcing a picture of steady, not explosive, strength.
Further along the curve, May–July 2027 contracts hold just below 4,800 MYR/t, with only marginal daily changes, while late-2027 positions ease slightly towards 4,720 MYR/t. Very long-dated contracts from 2028 onward are listed but remain illiquid with no fresh volume. Overall, the curve signals that the market is pricing in sustained relatively high palm oil values, but without a pronounced backwardation or near-term supply shock premium.
Note: EUR values assume an indicative rate of 1 EUR ≈ 5.0 MYR.
Supply & Demand Drivers
Crude oil has broken above USD 100/bbl for the first time in around two months, sharply improving the economics of biofuel blending and underpinning demand for vegetable oils, including palm. This move has helped pull the entire oilseed complex higher, with rapeseed and soybeans also gaining ground. In North America, hot and dry weather risks in the US Midwest threaten soybean yield potential, while excessive moisture followed by heat in Canada has created uncertainty around canola production prospects, bolstering global vegetable oil price support.
On the demand side, palm oil has recently faced headwinds from periods of weaker crude and soybean oil, which had briefly eroded its biofuel and feedstock competitiveness. As of this week, however, reports indicate that Malaysian palm oil exports in early July are moderately higher month-on-month, suggesting robust underlying buying interest even at elevated price levels. Importers may nonetheless turn cautious if prices continue to rise in tandem with energy, particularly in price-sensitive markets in South and Southeast Asia.
Fundamentals and Cross-Commodity Context
Recent USDA export data highlight solid forward demand for soybeans and soymeal, with new-crop sales exceeding expectations, while soy oil export volumes remain modest. This configuration keeps a firm tone in the broader oilseed complex without indicating a runaway shortage of vegetable oils. At the same time, canola futures in Winnipeg have surged to three-year highs on weather and disease concerns, with the November contract around 519 EUR/t, marking the strongest front-month level since mid-2023. This reinforces the relative tightness in high-oilseed markets and indirectly supports palm oil via substitution effects.
While palm oil’s own production path in key origins such as Malaysia and Indonesia appears seasonally adequate, the combination of energy-linked support, risks to alternative oils, and moderately improving export demand is keeping inventories from building excessively. The net effect is a balanced-to-slightly-tight fundamental backdrop that justifies current MDEX prices in the high 4,000s MYR/t but does not yet point to acute shortage conditions.
Weather Outlook in Key Growing Regions
Weather agencies across Southeast Asia indicate a tendency toward scattered showers and thunderstorms over parts of Malaysia and Indonesia in late July, with no immediate, widespread drought signal for the next several days. Marine and coastal warnings highlight episodes of heavy rain and storms over several Malaysian marine zones, suggesting continued convective activity rather than prolonged dryness.
Subseasonal outlooks for 20 July–2 August nevertheless flag the risk of episodic hotter and drier conditions in parts of the Maritime Continent under evolving ENSO patterns, which could become more relevant if they persist later into the growing season. For now, short-term weather does not present an acute threat to palm oil output, but market participants will remain sensitive to any shift towards a more pronounced El Niño-like dryness, which could quickly tighten supply expectations and add further risk premium.
Trading Outlook
- Bias: Modestly bullish in the short term, with upside driven by strong crude oil, firm vegetable oil prices and a supported MDEX forward curve around 4,600–4,800 MYR/t (≈ 920–960 EUR/t).
- Producers: Consider layering in hedges on rallies in Q4 2026–Q1 2027 contracts near or above 4,800 MYR/t (≈ 960 EUR/t) to lock in historically attractive prices while maintaining some exposure to further gains in case of weather or energy shocks.
- Consumers and refiners: Gradual forward coverage for late-2026 and early-2027 needs appears prudent, especially while MDEX backwardation is limited and crude oil remains above USD 100/bbl. Opportunistic buying on any pullbacks triggered by corrections in crude or soy oil could reduce average procurement costs.
- Speculators: The current environment favours a cautiously long bias, but with tight risk management given the market’s sensitivity to fast-moving macro and energy headlines. Spreads along the curve may offer relative-value opportunities if weather or demand data shift expectations for 2027 supply.
3-Day Directional Outlook (in EUR terms)
- MDEX front month (Aug 2026): Slightly higher to sideways over the next three sessions, with prices likely oscillating in a band roughly equivalent to 900–950 EUR/t, tracking crude oil and broader risk sentiment.
- MDEX Q4 2026 strip (Oct–Dec): Mild upward bias, with scope to test levels corresponding to around 950–975 EUR/t if energy strength persists and no bearish supply news emerges.
- MDEX early 2027 (Jan–Apr): Stable to firmer, expected to trade just above current levels in EUR terms, reflecting steady fundamentals and limited fresh selling pressure in deferred contracts.