Malaysian palm oil prices continue to decline amid record inventories

Malaysian palm oil futures extended their losses for a third consecutive trading session on November 4, reaching their lowest level in four months. The decline was driven mainly by expectations of record-high inventories and falling vegetable oil prices on the Chinese market. January futures on the Bursa Malaysia Derivatives Exchange fell by 55 ringgit, or 1.21%, to 4,496 ringgit ($1,104.67) per ton. This marked the lowest closing price since July 3, 2026.

Malaysia’s palm oil inventories may have increased by 6.8% month-on-month at the end of October to a record 3.75 mln tons. Stocks had already reached an all-time high of 3.51 mln tons in September. Expectations of further inventory accumulation heightened market concerns about excess supply and the prospects for a price recovery.

Additional pressure on Malaysian prices came from declining vegetable oil futures on China’s Dalian exchange. The most-active soybean oil contract fell by 1.45%, while palm oil futures lost 2.91%. Meanwhile, soybean oil prices on the Chicago Board of Trade (CBOT) declined by 0.64%. As palm, soybean and other vegetable oils compete for market share globally, lower prices for alternative oils add downward pressure on palm oil.

Meanwhile, rising global crude oil prices provided some support to the market. Higher crude oil prices traditionally improve the competitiveness of palm oil as a feedstock for biodiesel production, potentially boosting demand from the biofuel industry. However, this time the positive impact of the crude oil market was insufficient to offset expectations of rising inventories and declining prices for competing vegetable oils.

Another bearish factor was the strengthening of the Malaysian ringgit by 0.34% against the US dollar. This made palm oil slightly more expensive for foreign buyers and weakened its export competitiveness. Market participants continue to monitor inventory developments in Malaysia and prices of competing vegetable oils, which remain key factors influencing prices in the near term.

Tags: palm oil, Malaysia