Palm oil prices in Malaysia rise to four-week high

Malaysian palm oil futures closed at their highest level in four weeks on Tuesday, October 20, supported by rising prices of competing vegetable oils and expectations of a possible removal of the export duty on crude palm oil (CPO). January contracts on Bursa Malaysia Derivatives gained 52 ringgit, or 1.09%, to 4,818 ringgit (approximately $1,181) per ton. A recovery in trading activity following the previous day’s marginal decline provided additional support to prices.

On China’s Dalian Commodity Exchange, the most actively traded soybean oil futures rose by 0.28%, while palm oil futures gained 0.98%. Meanwhile, soybean oil futures on the Chicago Board of Trade (CBOT) increased by 0.67%. The simultaneous rise in vegetable oil prices across major global exchanges strengthened positive sentiment in the Malaysian market. Palm oil remains sensitive to soybean oil price movements, as the two products compete in global food and biofuel markets.

One of the main drivers of the price increase was market speculation that the Malaysian government could abolish the export duty on crude palm oil. According to market participants, such a move could improve the competitiveness of Malaysian products in international markets, stimulate exports and help reduce accumulated stocks. However, no official decision to remove the duty has been announced, and its potential impact on prices would depend on actual demand from importers.

Despite the recovery in prices, substantial palm oil stocks in Malaysia continue to limit the potential for further gains. In September, inventories increased to 3.51 mln tons amid record production, adding pressure to the domestic market. Meanwhile, trading activity increased significantly on October 20: trading volume for January contracts rose by 33.8% to 44,592 contracts, while open interest increased by 18% to 104,234 contracts. This indicates stronger market participation alongside rising prices.

According technical analyst Wang Tao, palm oil futures could extend their gains to 4,854–4,875 ringgit per ton. Technical indicators suggest the possibility of further short-term price increases, although high inventories in Malaysia remain a limiting factor. Future market movements will depend on a recovery in export demand, developments in competing vegetable oil markets and potential changes to Malaysia’s export policy. Without a substantial increase in overseas shipments, the potential for further price gains may remain limited.

Tags: Malaysia, palm oil