Palm Oil Futures Edge Higher as Stocks Rise and Curve Flattens

Palm oil futures are grinding higher but remain capped by rising Malaysian inventories and soft export data, leaving the forward curve only mildly upward-sloping and signalling a balanced, not bullish, market. After several volatile sessions, palm oil prices are stabilising with nearby MDEX contracts around MYR 4,400–4,500/t, helped by firmer crude oil and rival vegetable oils. However, fresh MPOB data show Malaysian stocks climbing to multi‑month highs, while exports in early May softened, limiting follow‑through on rallies. The market is caught between structurally supportive biodiesel and energy demand on the one side and ample short‑term supplies on the other. For the coming days, modest upside with frequent pullbacks looks more likely than a sustained breakout.

Prices & Curve Structure

Front MDEX contracts closed higher on May 15, 2026, with Jun‑26 settling at MYR 4,390/t and Jul‑26 at MYR 4,420/t, up around 0.6% on the day. Along the 2026 strip, prices step up only gradually from roughly MYR 4,390/t (Jun) to around MYR 4,501/t (Dec), implying a very shallow contango. Further out, 2027–2028 contracts trade near MYR 4,392/t, underscoring the market’s view that today’s price levels are broadly sustainable rather than a short‑lived spike.

*EUR conversion based on ~5.05 MYR/EUR, indicative only.

Recent sessions show the market rebounding from a short bout of weakness, helped by a move in Malaysian futures back above MYR 4,500/t as of May 18, 2026, after a three‑day losing streak. Gains have been linked to stronger crude oil and soybean oil prices, which lift palm oil via the competing‑oils channel. Nevertheless, weekly performance remains soft, evidencing persistent selling on rallies.

Supply, Demand & Stocks

On the fundamental side, Malaysian supply has improved sharply. April 2026 MPOB data show national palm oil inventories at around 2.3 million tonnes, up 1.7% m/m, while CPO output jumped by more than 18% m/m to about 1.63 million tonnes. This production growth reflects seasonally stronger yields and ongoing recovery from earlier weather‑related disruptions.

Demand has not kept pace with supply. Cargo surveyors estimate that exports of Malaysian palm oil products in early May (1–15) were down between roughly 1.6% and 16.5% month‑on‑month, pointing to subdued overseas buying, especially into key Asian and Middle Eastern destinations. Sluggish exports, combined with heavier output, are the main reasons why analysts expect a slightly bearish undertone in the near term despite firmer flat prices.

External Drivers & Weather

Two external themes dominate: energy prices and weather. First, a firm crude oil complex continues to underpin palm oil via biodiesel economics; strong gasoil prices keep discretionary blending margins attractive in Indonesia and Malaysia, dampening downside risks for CPO. Second, several investment banks now project elevated CPO prices through 2026 on expectations of robust biodiesel demand and the possibility of a strong El Niño later this year, which could curtail yields in Southeast Asia if it materialises.

For now, weather in major producing regions is not severely disruptive, but the risk skew is to the upside for prices if prolonged dryness develops in Malaysia or Indonesia. Market participants are watching rainfall forecasts closely; any confirmation of below‑normal precipitation during key pollination and fruit‑filling phases could quickly push nearby futures above current resistance in the mid‑MYR 4,500s.

Trading Outlook

• Producers / crushers: Use current firmness above ~EUR 870/t to add incremental hedges on Q3–Q4 2026 sales. The shallow contango offers limited reward for waiting, while rising inventories argue for proactive coverage.
• Importers / refiners: Stagger purchases over the next 4–6 weeks rather than rushing to lock in full coverage. High stocks and weak exports suggest dips back toward the low MYR 4,400s (≈EUR 870/t) remain likely.
• Speculators: Bias towards range‑trading strategies, buying near support around MYR 4,350–4,380 and taking profit into rallies above MYR 4,500, unless clear weather‑ or policy‑driven bullish catalysts emerge.

3‑Day Directional View (Price Indication in EUR)

• MDEX (Malaysia, front month): ≈EUR 875–900/t, bias modestly higher but capped by stock pressure.
• Europe (CIF refined palm olein, implied): Closely tracking MDEX; expect small gains of EUR 10–20/t if crude oil and soybean oil hold recent strength.
• Overall: Sideways‑to‑firm with intraday volatility; watch export survey updates and short‑term weather forecasts for potential direction shifts.