Palm Oil Prices Edge Higher as Malaysia Recovers, Indonesia Nears Final Tariff Deal with US

Palm oil prices in Malaysia inched up on Tuesday, with the benchmark contract rising 0.19 percent to 4,159 ringgit (MYR) per tonne. The modest gain follows weeks of volatility, with prices still down 7.86 percent over the past month and 15.5 percent lower than a year earlier, according to CFD market data.

Prices hovered above 4,150 ringgit per tonne on Monday, supported by a weaker ringgit and firmer performance in China’s Dalian soyoil and palm oil futures. The rebound helped the commodity recover from a four-month low. Still, analysts warned that concerns over Indonesia’s land-seizure policies and uncertainty surrounding its biodiesel mandate continue to cloud the market outlook.

As of Oct. 1, the Indonesian government had reclaimed 3.4 million hectares of illegal palm oil plantations, with 1.5 million hectares officially handed over to the state-owned company Agrinas Palma Nusantara. The transfer, conducted in four stages by the government’s Plantation Land Task Force (Satgas PKH), represents a significant step in regulating unauthorized plantations. Authorities are currently verifying the remaining 1.8 million hectares, which are expected to be transferred next year.

Further limiting gains was data from a cargo surveyor showing Malaysian palm oil product shipments for Nov. 1–15 slid 15.5 percent from the previous month. Supply-side pressures also weighed on sentiment, with October output jumping 11.02 percent, reaching its highest level since August 2015. Malaysia’s palm oil inventories likewise climbed to a six-and-a-half-year high. In India, the world’s largest buyer, imports fell to a five-month low in October as refiners shifted to soybean oil amid rising palm prices. For the 2024/25 marketing year, India’s palm oil imports dropped 16 percent to 7.56 million tonnes, the lowest in five years.

Indonesia, the world’s top palm oil producer, is moving closer to finalizing a tariff agreement with the United States that could reshape export prospects for key commodities. Chief Economic Affairs Minister Airlangga Hartarto said negotiations are now in the final phase, with the goal of concluding the deal before year-end.

“Almost all the text has been discussed. We have sent it to the US, and the remaining step is the legal drafting from both sides,” Airlangga told reporters at the 13th U.S.–Indonesia Investment Summit in Jakarta on Monday. He added that no other countries, including the United Kingdom, had raised objections to the preferential tariff arrangement.

Under the proposed agreement, several Indonesian commodities not produced in the US –including crude palm oil (CPO), rubber, tea, coffee, and related rubber products– would receive 0 percent tariffs. Tariffs on textiles and footwear, however, remain under negotiation. Earlier discussions saw the US lower its planned tariff hike on certain Indonesian products from a potential 32 percent to 19 percent.

Tags: Malaysia, palm oil, futures, soyoil, prices