Malaysian palm oil futures extend losses on high inventories, weaker rival oils and a firmer ringgit, despite robust export demand ahead of Diwali.
Prices
The MDEX palm oil strip on 29 October 2026 shows a broad but orderly correction after recent strength:
| Contract (MDEX) | Close (MYR/t) | D / D Change (MYR) | D / D % |
|---|---|---|---|
| Nov 2026 | 4,415 | -39 | -0.88% |
| Dec 2026 | 4,564 | -27 | -0.59% |
| Jan 2027 (benchmark) | 4,667 | -18 | -0.39% |
| Mar 2027 | 4,839 | -16 | -0.33% |
| Aug 2027 | 4,839 | -12 | -0.25% |
The curve remains gently upward sloping into mid‑2027, with most liquid contracts clustered between roughly MYR 4,800 and 4,900 per tonne, signalling that the market still prices in relatively firm medium‑term fundamentals despite the current correction.
On the Bursa Malaysia Derivatives Exchange, the actively traded January contract is trading near MYR 4,600–4,700 per tonne, having fallen around 1.5% this week and touching a two‑week low as high domestic inventories, softer Dalian palm and soyoil futures, and a stronger ringgit weigh on sentiment.
Supply & Demand
Despite the current price weakness, export demand is strong. Cargo surveyors report that Malaysian palm oil product exports for 1–25 October rose between about 47% and 68% versus the same period in September, driven largely by pre‑Diwali restocking in India and steady offtake from other Asian buyers.
However, this demand strength is being overshadowed by heavy supply. Malaysian inventories are reported at record or near‑record levels, reflecting robust production and earlier softer exports. At the same time, EU palm oil imports since the start of the 2026/27 season (July) are down roughly 21% year‑on‑year, signalling demand destruction or substitution in a key consuming region, partly due to sustainability policies and competing vegetable oils.
Competition from other oils is intensifying. Russia and Ukraine are expected to normalize Black Sea exports, boosting global supplies of sunflower oil and putting indirect pressure on palm and soyoil through cross‑substitution in the vegetable oil complex. In the US, soyoil futures have declined alongside soybeans, reflecting both weaker wheat‑led grain sentiment and the prospect of greater Black Sea competition in vegoils and meals.
Fundamentals & External Drivers
The broader oilseed complex is soft. US soybean futures have fallen for three consecutive sessions, with soyoil leading the decline as traders anticipate stronger Black Sea sunflower oil flows. This has spilled over into Canadian canola, where ICE Winnipeg futures have eased slightly, and into EU rapeseed, where high cash prices reflect tight local seed supply but also cap crushers’ margins and oil demand growth.
For palm oil specifically, the main bearish levers are:
- Record‑high Malaysian inventories and expectations of still‑solid near‑term output.
- Weaker rival oils on China’s Dalian exchange and the Chicago Board of Trade, periodically undercutting palm’s pricing power.
- A firmer ringgit, which makes palm oil more expensive in foreign currency terms and can dampen export competitiveness.
On the supportive side, several structural and medium‑term factors remain in play:
- Indonesia’s biodiesel policy (B40 moving toward B50) is expected to absorb an additional several million tonnes of palm oil annually over the next few years, tightening export availability.
- Lingering El Niño‑related weather risks could curb yields in Southeast Asia in 2027, particularly if dryness persists into key fruiting periods.
- Crude oil price swings continue to influence palm’s role in biodiesel; recent crude softness has reduced support, but any renewed rally in energy markets would quickly raise palm’s value in the fuel complex.
Weather & Regional Outlook
Current weather across major producing regions in Malaysia and Indonesia is mixed but generally not yet disruptive. Forecasts point to intermittent showers with localized dryness, consistent with a lingering El Niño pattern but not yet severe enough to materially hit short‑term output. Nonetheless, markets are increasingly sensitive to any confirmation of yield stress, especially for 2027 production expectations.
For key consuming regions, there is cautious attention on China’s macro outlook. Upcoming official PMI data may confirm whether manufacturing and consumer demand are stabilizing or weakening, which would influence discretionary palm usage in food processing and industrial sectors.
Trading Outlook & 3‑Day Price Indication
Trading outlook (next 1–2 weeks)
- Short‑term bias: Mildly bearish while Malaysian stocks remain high and Dalian/CBOT vegoils stay soft. Rallies are likely to face selling interest near the upper end of the recent MYR 4,600–4,900 range for key 2026/27 contracts.
- Processors & users: Consider staggered hedging or incremental coverage on price dips around the current correction zone, especially for Q1–Q2 2027 needs, to balance downside potential with medium‑term supply risk.
- Producers: Use modest rallies to add hedges, keeping some upside open in case weather or biodiesel demand tighten balances faster than expected.
- Speculative participants: Short‑term strategies may favor selling into strength while monitoring export data, China PMI releases and inventory statistics for inflection signals.
3‑day directional outlook (Bursa Malaysia palm oil futures)
- Nearby January 2027 contract: Likely to trade choppy with a slight downward tilt, tracking Dalian and CBOT soyoil moves and any updates on Malaysian stocks.
- Q2 2027 strip: Expected to remain relatively stable versus nearby months, with only modest additional weakness as the market already prices a moderate carry.
- Deferred 2028–2029 positions: Very illiquid at present and likely to stay in a narrow range; primary signals will come from policy (biodiesel blends) and confirmed longer‑term yield impacts rather than near‑term trading flows.