News and Articles

• Palm oil received support from biodiesel demand.
• Malaysian production increased to 1.63 million tonnes.
• Palm oil stocks reached 2.5 million tonnes.
• The extraction rate rose to a decade high.
• High importer inventories limited further price gains.

Crude palm oil prices are expected to remain firm within a limited near-term range as stronger biodiesel use offsets high vegetable oil inventories. The forecast places prices between MYR 4,400 and MYR 4,650 per tonne. Indonesia’s B50 biodiesel mandate and firmer gasoil economics have raised the value of palm oil as an energy feedstock.

The latest verified Malaysian local-delivered spot assessment before the price cutoff was MYR 4,603.50 per tonne. This placed the physical market inside the forecast band and showed that biodiesel support had not pushed prices beyond the level where buyers were expected to resist.

Malaysian production increased by 8% month on month to 1.63 million tonnes as the seasonal output cycle strengthened. Production was still 3% below the prior year, marking a fourth consecutive annual decline. Exports rose by 6.1% from the previous month to 1.20 million tonnes but remained 4% lower year on year.

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Stocks climbed to 2.5 million tonnes, giving refiners and exporters a larger buffer. The average oil extraction rate improved to 20.08%, up from 19.45% and its highest level in a decade. Better extraction allowed mills to obtain more oil from the same quantity of fruit, helping offset lower annual production.

Edible-oil buyers face a market with support on the cost side and resistance on the demand side. Biodiesel increases competition for crude palm oil, but high inventories in large importing countries reduce the need for urgent purchases. Seasonal restocking by India can strengthen demand, though existing stocks and food inflation could limit order sizes.

Food, personal-care and oleochemical manufacturers should compare crude palm oil, refined palm oil, palm olein and palm stearin separately. Refining margins, fractionation costs and local availability can cause these products to move at different rates. A stable crude price does not guarantee stable costs for every derivative.

Buyers can divide requirements across monthly delivery windows and use spot-linked adjustment clauses with transparent quality and freight components. Contracts should define the reference assessment, delivery location, currency conversion and timing of each reset. Supplier offers that combine an old raw-material value with current energy or freight charges require close review.

The present supply buffer reduces the risk of an immediate shortage. Biodiesel demand and slower annual production keep the market from moving into a sustained decline, leaving procurement teams with a firm but contained purchasing range.