China’s palm oil inventories nearly double, increasing pressure on prices

Commercial palm oil inventories in China reached approximately 1.21 mln tons in late October 2026, nearly double the level recorded during the same period last year and among the highest for this time of year. Substantial stocks combined with weak domestic demand have pushed prices lower. According to SunSirs, the average market price of palm oil declined by 3.03% in October, falling from 9,250 yuan/t at the beginning of the month to 8,970 yuan/t as of October 29.

Ample palm oil supplies in Southeast Asia have added further pressure to the market. October traditionally falls within Malaysia’s high-production season, with particularly strong output growth reported in Sabah and Sarawak. Despite increased exports driven by active purchases from India, shipments have been insufficient to fully absorb the rise in production. Meanwhile, Indonesia continues to expand production capacity, maintaining substantial supplies on the global market.

Palm oil demand in China remains weak following the holiday season, when food manufacturers traditionally build up additional inventories. Producers of confectionery, biscuits and instant noodles are currently purchasing raw materials mainly to meet immediate needs. In addition, falling soybean oil prices have narrowed the price gap between soybean and palm oil, gradually eroding the latter’s competitive advantage. Some processors have already started switching back to soybean oil.

The situation is further complicated by weakening demand from the biodiesel industry. Lower global crude oil prices have reduced the economic attractiveness of producing biodiesel from palm oil. Meanwhile, Indonesia’s B40 program has failed to deliver the expected increase in feedstock consumption, while concerns over a possible delay in implementing the B50 mandate have further weighed on market sentiment.

According to SunSirs, palm oil prices in China could fluctuate within a range of 8,800–9,300 yuan/t in November, with a continued downward bias. Seasonal declines in production in Malaysia and Indonesia, typically beginning in November, could provide some support to the market. Another risk is the potential impact of El Niño on oil palm yields, although no significant drought-related production losses have been recorded so far. Nevertheless, high inventories and limited demand are expected to continue restricting any price recovery.

Tags: China, palm oil