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Kuala Lumpur, Oktober 23, 2026 – Malaysian palm oil futures retreated more than 1% this week, with the benchmark November contract closing between USD 960 and USD 990 per tonne.
The decline reflected profit taking after a recent rally, as traders weighed record high inventories against resilient export demand.
Malaysia’s stockpiles surged to 3.51 million tonnes in September, the highest ever recorded, while October output is expected to remain elevated due to seasonal factors.
Analysts say this supply pressure has capped upside momentum, even as demand from key buyers continues to provide support.
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Exports offered a counterbalance to the bearish tone.
Shipments in the first half of October rose sharply, climbing between 43% and 58% month on month, fueled by festival demand from India.
Traders note that this surge helped cushion the market from deeper losses, underscoring palm oil’s central role in global food and energy supply chains.
Policy developments in Indonesia added further complexity.
Jakarta raised its crude palm oil reference price to USD 1,042 per tonne for October, sustaining high export levies.
This move has reinforced Malaysia’s need to consider adjustments to its own export tax regime to remain competitive in the global market.
Weather risks also loom over the medium-term outlook.
The El Niño phenomenon, expected to intensify into 2027, could reduce yields and tighten supplies, offering potential support for prices.
Rising crude oil benchmarks enhance palm oil’s attractiveness as a biodiesel feedstock, further bolstering demand prospects.
For now, traders view the decline as a consolidation phase rather than the start of a prolonged downturn.
With inventories at record highs and exports surging, the market is likely to remain volatile, oscillating between near-term supply pressure and longer term structural demand.
Palm oil’s trajectory will depend on whether Malaysia can sustain export momentum beyond the festival season and how policymakers respond to Indonesia’s aggressive levy structure.
As one Kuala Lumpur-based analyst observed, “The market is caught between today’s oversupply and tomorrow’s weather risks.”
