Palm oil prices fail to respond to rising Malaysian stocks

According to the Malaysian Palm Oil Board (MPOB), palm oil inventories in Malaysia have been growing for 10 consecutive months, and in December increased by another 7.58% to a 7-year high of 3.05 million tonnes (in November +13%, October +4.2%, September +7.2%, August +4.2%, July +4%, June +4%), as production volumes exceed export demand.

However, palm oil quotes do not respond to the increase in inventories and remain stable for two months.

Palm oil production in Malaysia in December decreased by 5.46% compared to November to 1.83 million tons (in November +5.3%, in October +11%, in September -0.7%, in August +2.4%, in July -7.09%), which was the highest December figure in the last 8 years.

Palm oil exports in December grew by 8.52% to 1.32 million tons after falling by 28.1% to 1.21 million tons in November (October +18.6%, September -7.7%, August -0.7%, July +3.82%).

Analysts polled by Reuters expected palm oil stocks to be 2.97 million tonnes, production to be 1.76 million tonnes and exports to be 1.25 million tonnes.

February palm oil futures on Bursa Malaysia fell just 0.6% to RM4,064/t or $1,002/t. They remained stable in local currency for the month, while the dollar price rose 1.6% amid a strengthening ringgit.

Rising palm oil inventories in Malaysia and Indonesia’s delay in moving from a B40 to a B50 mandate in 2026 are putting pressure on quotes, but traders are hoping for a pick-up in demand from India due to restrictions on sunflower oil supplies from Ukraine caused by Russian attacks on ports and oil extraction plants.