Malaysia’s palm oil industry is set to remain bullish in the near term on stronger exports and easing inventories, according to Fastmarkets Palm Oil Analytics senior analyst Sathia Varqa.
Sathia said crude palm oil (CPO) prices are likely to stay elevated, trading between RM4,200 and RM4,500 per ton, driven by global trade uncertainties and unclear United States biofuel policy. Import tariffs and shifting trade barriers in major economies have disrupted flows of competing edible oils, tightening supply in key markets, amplifying risk premiums, and spurring speculative buying that has reinforced CPO price momentum.
“A notable example is China’s move to impose anti-dumping duties on Canadian canola, which drove rapeseed oil futures higher on Chinese exchanges. The rally quickly spilled over into palm oil futures, as traders recalibrated positions across the vegetable oil market,” he told Bernama.
He added that changes to U.S. biofuel policies through the 45Z program have “shifted the playing field by favouring domestic feedstock over imports”. “With soybean oil being the main feedstock for biodiesel in the U.S., these policy adjustments drove soybean oil prices higher. The strength in soybean oil prices spilled over into palm oil, lifting CPO alongside the broader edible oil market,” he said.
Export demand is also improving, led by India ahead of the festive season. “The near-term export outlook for palm oil remains bright, underpinned by strong festive-driven demand from India. Seasonal restocking ahead of major festivals is expected to provide solid support for shipments in the coming months,” he said.
On stocks, Sathia noted inventories edging above two million tons reflect short-term supply, demand dynamics rather than oversupply. Production growth is ‘stagnant’, with Malaysia’s planted area remaining static at five million hectares from 2012 to 2024. “Hence, we anticipate production to peak soon and then ease into the fourth quarter of 2025 in line with seasonal patterns,” he said.
Latest data from the Malaysian Palm Oil Board show palm oil stocks rose for a fifth consecutive month in July to their highest level in nearly two years, as production outpaced exports. Total inventories climbed 4.02% to 2.11 million tons in July from 2.03 million tons in June, according to MPOB figures.
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