Malaysian palm oil prices decline amid high inventories and weaker soybean oil

Malaysian palm oil futures ended trading slightly lower on Monday, October 19, pressured by elevated inventories and weaker soybean oil prices in Chicago. January contracts on the Bursa Malaysia Derivatives Exchange fell by 3 ringgit, or 0.06%, to 4,766 ringgit ($1,168.14) per ton. Meanwhile, stronger vegetable oil futures in China limited losses in the Malaysian market.

On China’s Dalian Commodity Exchange, the most actively traded soybean oil futures rose by 0.4%, while palm oil contracts gained 0.58%. In contrast, soybean oil futures on the Chicago Board of Trade (CBOT) declined by 0.09%. According to traders, mixed movements across major exchanges prompted cautious trading. Palm oil remains sensitive to price fluctuations in other vegetable oils, as it competes with them in the global food and biofuel markets.

Elevated palm oil inventories in Malaysia remain another source of pressure, limiting the potential for price increases. Market participants are also discussing the possibility of waiving export duties on crude palm oil to stimulate shipments and reduce accumulated stocks. However, no official decision on such changes has been announced. According to government data released on Monday, Malaysia’s agricultural exports declined by 5.7% in September, partly due to lower shipments of palm oil and palm-based products.

Logistical difficulties also persist in some producing regions of Indonesia. In West Kalimantan province, processing mills reduced their intake of fresh oil palm fruit bunches in September as lower river levels disrupted raw material transportation. Meanwhile, declining global crude oil prices are adding further pressure to palm oil. Lower crude oil prices make palm oil less competitive as a feedstock for biodiesel production, limiting support from the energy sector.

Despite the current decline in futures, technical indicators suggest the possibility of a short-term price recovery. According to technical analyst Wang Tao, palm oil futures could rise to a range of 4,799–4,820 ringgit per ton. However, further market developments will depend on the pace of inventory reductions in Malaysia, a recovery in export demand and price movements in competing vegetable oil markets. Potential changes in Malaysia’s export policy and fluctuations in global crude oil prices will also remain important factors.

Tags: palm oil, Malaysia