Malaysia palm oil outlook to stay bullish on strong exports, high CPO prices

Malaysia’s palm oil industry is expected to stay bullish in the near term, supported by stronger exports and easing inventories, Fastmarkets Palm Oil Analytics senior analyst Sathia Varqa said.

Sathia said crude palm oil (CPO) prices are likely to remain high, trading between RM4,200 and RM4,500 per tonne, driven by global trade uncertainties and unclear United States (US) biofuel policy.

He said import tariffs and shifting trade barriers in major economies have disrupted flows of competing edible oils, tightening supply in key markets, amplifying risk premiums, and spurring speculative buying that has reinforced CPO price momentum.

“A notable example is China’s move to impose anti-dumping duties on Canadian canola, which drove rapeseed oil futures higher on Chinese exchanges. The rally quickly spilled over into palm oil futures, as traders recalibrated positions across the vegetable oil market,” he told Bernama.

He noted that changes to US biofuel policies through the 45Z programme have shifted the playing field by favouring domestic feedstock over imports.

“With soybean oil being the main feedstock for biodiesel in the US, these policy adjustments drove soybean oil prices higher. The strength in soybean oil prices spilled over into palm oil, lifting CPO alongside the broader edible oil market,” he said.

Sathia also said the industry’s outlook remains steady, driven by stronger exports as palm oil demand emerges from India ahead of the upcoming festive season.

“The near-term export outlook for palm oil remains bright, underpinned by strong festive-driven demand from India.

“Seasonal restocking ahead of major festivals is expected to provide solid support for shipments in the coming months,” he said.

On palm oil stocks, he noted that inventories edging above two million tonnes reflect the temporary outcome of short-term supply-demand dynamics.

“The current situation (rise in inventories) does not point to an oversupply. This is due to production growth being stagnant, with Malaysia’s palm oil planted areas remaining static at five million hectares from 2012 to 2024.

“Hence, we anticipate production to peak soon and then ease into the fourth quarter of 2025 in line with seasonal patterns,” he added.

Malaysia’s palm oil stocks rose for a fifth consecutive month in July to their highest level in nearly two years, as production outpaced exports, according to the Malaysian Palm Oil Board (MPOB).

Total inventories climbed 4.02 per cent to 2.11 million tonnes in July from 2.03 million tonnes in June, MPOB data showed.

Tags: exports, prices, Crude palm oil, US, Malaysia, palm oil, biofuel, demand, inventories