Palm Oil Price Trends
Palm Oil
Price movements
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Month-on-month Change
Year-on-year Change
EU Palm Oil Prices Move Up 3.62% Month on Month
Key Takeaways
- Evergreen production cycle forces Malaysian supply management despite weak demand. Market players said palm oil's continuous production requirements pushed processed stocks to unsustainable levels, with February MPOB data showing processed oil inventories increasing 7.37% to 1.226 million tonnes despite crude production declining 18.55%, forcing refiners to aggressively clear inventory as storage capacity reaches limits.
- Chinese and Indian trade execution contrasts broader demand weakness. Industry sources noted Chinese palm olein trades executed at $1,170/mt CFR for April delivery and $1,195/mt for September despite port stocks exceeding 800,000 tonnes above five-year averages, while Indian crude palm oil traded at $1,240/mt CFR for April as buyers demonstrated steady purchasing despite import margins turning negative by 5 rupees per kilogram above domestic mustard oil alternatives
- Malaysian export surge reflects supply clearance rather than demand recovery, players say. Cargo surveyors reported March exports surging 38-50% compared to February, with sources emphasizing the bulk comprised discounted palm olein to Middle East and African buyers rather than crude palm oil demand.
- Energy correlation dominates sentiment despite physical market disconnect. Market participants noted palm oil's trajectory remains directly correlated to crude oil movements following geopolitical developments, with traders emphasizing that biodiesel mandate speculation provides futures support even as March Indian shipment estimates declined to 550,000-600,000 tonnes from February's 800,000-900,000 tonnes, highlighting the divide between energy-driven speculation and commercial reality.
Market Sentiment
- Market participants expressed concern with deteriorating trade economics across key consuming regions, with industry sources noting that negative import margins in India have created what traders described as economically irrational purchasing conditions. Sources said this reflects broader skepticism about sustainable demand growth in April under current pricing structures, with participants questioning whether speculative energy correlation can continue supporting futures markets amid weakening commercial fundamentals.
- Industry insiders noted increasing uncertainty about positioning strategies as cash market conditions diverge from futures activity, with sources describing markets as "waxed and waned awaiting bona-fide buying interest" while storage constraints force supply management decisions. Market players said this creates divided sentiment where operational necessities drive trade flows rather than confident demand expectations, leading to cautious forward positioning approaches
- Traders emphasized continued confidence in energy market correlation despite physical weakness, with sources noting that biodiesel mandate flexibility provides policy tools to maintain tracking relationships with crude oil markets. Market participants suggested that geopolitical developments including proposed Iran conflict resolution add uncertainty layers, creating wait-and-see attitudes until clearer signals emerge about both energy market direction and physical demand recovery prospects
- Sources indicated tactical rather than strategic market approaches are dominating participant behavior, with industry contacts noting that selective Chinese and Indian buying reflects immediate needs rather than forward confidence. Market players said the combination of bloated stocks, negative margins, and speculative support creates risk-averse sentiment where minimal coverage strategies prevail until market fundamentals align more clearly
Palm Oil
Supply
Indonesia
Annualized headline inflation in China hit a 3-year high in February.
Market participants told Expana that Indonesian President's announcement increasing biodiesel blends from 40% to 50% this year represents concrete policy commitment beyond previous speculation. Industry sources noted that the 10-percentage point increase could substantially absorb domestic palm oil production for biodiesel requirements, reducing export availability precisely when Malaysian production faces operational challenges with SPPOMA data showing 11.21% decline in March output.
Sources emphasized that B50 implementation timing potentially validates energy market correlation themes supporting futures sentiment, with market players noting that sustained government commitment to higher blending requirements could fundamentally alter regional supply availability as Indonesian domestic consumption increases while alternative supply sources face production constraints.
Malaysia
Palm production may increase but concerns remain
Market participants told Expana that Malaysian palm oil production fundamentals reveal deepening supply concerns, with Southern Peninsula Palm Oil Millers Association (SPPOMA) data for 1-25 March showing production declining 11.21% with yields dropping 9.74%. Industry sources noted these declines occurred simultaneously with March's 38-50% export surge, yet April crude palm oil exports to India could decline approximately 38% compared to March.
Sources emphasized that February MPOB data showing processed palm oil stocks increasing 7.37% to 1.226 million tonnes despite crude production declining 18.55% created storage pressures that ‘forced’ aggressive clearance strategies. However, market players suggested that underlying consumption weakness persists despite production constraints, with one source noting that "the market is not feeling the storm, but the horses are starting to whinny in the corral," reflecting complex supply-demand dynamics where neither side provides clear market direction.
Palm Oil
Price drivers
Electricity
Electricity prices increase following Gulf turmoil
Electricity prices increased throughout March, up by 86% MOM at the end of the month, as Middle East turmoil drove up energy costs.
Logistics
Shipping carriers apply emergency surcharges
The Global Shipping 40-foot Container Composite Index increased by about 20% MOM in end-March, to $2,279/unit, marking four consecutive weeks of increases. Following the start of US and Israeli military action in Iran, energy prices have spiked, leading shipping carriers to apply emergency fuel surcharges to freight rates. Market sources expect rates to remain elevated in the short term if the volatility and regional disruption persist. On routes outside of the region, sources state that operations remain relatively normal. Carriers continue to wait for an uptick in demand following the Chinese Lunar New Year, which has been slow to materialize.
Crude Oil and Natural Gas
Crude oil prices up on geopolitical tensions
The price of Brent crude oil increased throughout March, with continued military action in the Middle East fueling the uptrend. The prolonged de facto closure of the Strait of Hormuz, through which 20% of global crude oil production flows, is tightening supply in key destination markets.
Fertilizer
Fertilizer prices remain elevated
NPK fertilizer prices stood at $683.39/MT as of March 27, 2026, up by 20% YOY. Sources report that the closure of the Strait of Hormuz has significantly affected fertilizer flows.
Palm Oil
Price forecast
Palm Oil
The price of palm oil rallied quite strongly at the end of Q1 in response to the Iran war. There is justification for this price rally from other areas, one of being the estimated range. Prices entered a small anti-bubble, which called for a price increase. The direction of the estimated range is also important, as this also begins to rally. A contrary argument comes from seasonality, which highlights a typical seasonal decline from the end of Q1, into late Q2.
Inventories on the other hand are forecast to rally slightly into late 2026 according to the U.S. Department of Agriculture. The relationship here is typically that when inventories increase, prices decline, and so this is the expected pressure from this perspective. Looking at the technical analysis, the long-term chart is at a key juncture. A real break from the MACD above the signal line would signal the beginning of a new 1–3-year uptrend. We are monitoring this closely. From a shorter-term technical perspective, prices are in a short-term uptrend, just above the moving average. Overall, we expect some downside into Q2, but this could be temporary, depending on how the geopolitical situation develops.
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