Palm oil prices in Malaysia decline after reaching four-week high

Palm oil futures on Malaysia’s Bursa Malaysia exchange fell by more than 1% on October 21 following earlier gains. The benchmark January 2027 contract closed at 4,768 ringgit/t ($1,168.63/t), down 50 ringgit, or 1.04%, from the previous session. A day earlier, prices had reached 4,818 ringgit/t, their highest level in four weeks.

Prices declined across most futures contracts. November palm oil futures fell by 71 ringgit to 4,523 ringgit/t, December contracts lost 70 ringgit to 4,663 ringgit/t, while February futures declined by 31 ringgit to 4,868 ringgit/t. Meanwhile, trading volume for the benchmark January contract dropped by 20.6% to 35.4 thsd contracts, while open interest decreased by 4.1% to 99.99 thsd contracts. These figures indicate weaker trading activity amid the price correction.

Despite lower palm oil prices, export demand remains supportive for Malaysian suppliers. According to independent cargo surveyors, Malaysia’s exports of palm oil products increased by 58.5–78.4% during October 1–20 compared with the corresponding period in September. Strong shipment growth is supporting the market and partially offsetting pressure from profit-taking. Meanwhile, elevated palm oil stocks in Malaysia remain among the factors limiting further price increases.

Additional support comes from higher vegetable oil prices on China’s Dalian Commodity Exchange. Palm oil futures rose by 1.31%, while soybean oil gained 0.26%. Meanwhile, soybean oil futures on the Chicago Board of Trade (CBOT) declined by 0.12%. Developments in the energy market also remain important, with Brent crude oil prices trading near five-month highs. Higher crude oil prices improve the competitiveness of palm oil as a feedstock for biodiesel production.

According to technical analyst Wang Tao, palm oil futures failed to break above the resistance level of 4,834 ringgit/t, creating the potential for a further price correction. The analyst sees a possible decline to the 4,706–4,736 ringgit/t range. However, stronger Malaysian exports and elevated crude oil prices could limit further losses. Future market movements will depend on palm oil export shipments, changes in Malaysian inventories and developments in competing vegetable oil markets.

Tags: Malaysia, palm oil