Palm oil prices rose for the third consecutive session, reaching 4,122 Ringgit following a report by the MPOB.
Malaysian palm oil futures maintained their upward momentum thanks to a 7.72% drop in inventories and a weaker Ringgit, while concerns about long-term yields in Southeast Asia persist.
Malaysian palm oil futures prices rose for the third consecutive session on February 11th. The market recovery was driven by data showing a decline in ending inventories for the first time in nearly a year, combined with a weakening local currency that boosted the competitiveness of exports.
Price movements on international exchanges
On the Bursa Malaysia exchange, the FCPOc3 palm oil contract for April 2026 delivery started the session with a gain of 9 Ringgit (equivalent to 0.22%), reaching 4,104 Ringgit/tonne. By lunchtime, the gains had extended by another 27 Ringgit, equivalent to 0.66%, closing at 4,122 Ringgit (approximately US$1,050.46)/tonne.
In contrast to the upward trend in Malaysia, the Chinese market saw a slight correction. On the Dalian exchange, soybean oil prices (DBYcv1) fell 0.02% and palm oil prices (DCPcv1) fell 0.54% by midday. On the Chicago exchange, soybean oil prices (BOc2) also recorded a slight decrease of 0.17%.
Monetary factors and supply and demand support prices.
The Malaysian Ringgit fell 0.08% against the US dollar by midday. The weakening of the domestic currency makes palm oil cheaper for international importers, thereby stimulating demand. In addition, stable US crude oil prices due to geopolitical uncertainty also make palm oil a more attractive option for biofuel production.
According to a report from the Malaysian Palm Oil Board (MPOB), inventories in January fell by 7.72%. This marks the first decline in 11 months, driven by strong export growth while production entered its seasonal low.
Nevertheless, export data for early February is showing signs of slowing down. According to AmSpec Agri Malaysia, exports from February 1st to 10th decreased by 14.3%, while Intertek Testing Services estimates a decrease of 10.5% compared to the same period last month.
Challenges related to crop productivity and acreage.
The Malaysian palm oil industry is facing challenges of aging trees and disease outbreaks. Carl Bek-Nielsen, Chairman of the Malaysian Palm Oil Council, warned that approximately 800,000 hectares of palm plantations have been infected with Ganoderma fungus, causing yields to stagnate or decline.
- Plant age:It is projected that 35% of the palm oil plantations will be 19 years old or older by 2027.
- Production target:The industry aims to increase average productivity to 4.5 tons of crude oil per hectare (compared to the current 3.5 tons) to reach a total output of 26 million tons by 2035.
- Support policies:The Malaysian government has allocated 20 million Ringgit for 2026 to promote automation and mechanization in plantations.
Market outlook for 2026
In Indonesia, the world's largest producer, the delay in the B50 biofuel program has created some downward pressure on prices. However, the mandatory use of B40 remains in place, helping to ensure some domestic demand is met. Indonesia's palm oil production is projected to reach 48.8 million tons in 2026, while Malaysia's is estimated at 19.7 million tons.
Reuters technical analyst Wang Tao believes palm oil prices could stabilize in the 4,063-4,083 Ringgit/tonne range before establishing a new trend. The average forecast for the year is for crude palm oil (CPO) prices to fluctuate between 3,900 and 4,000 Ringgit/tonne, lower than last year's average closing price of 4,233 Ringgit.
