Lang
Malaysia's palm oil sector is expected to remain on an upward trend in the near term, supported by rising exports and falling stocks, according to Sathia Varqa, senior analyst at Fastmarkets Palm Oil Analytics.
Sathia said crude palm oil (CPO) prices are likely to stay elevated, trading between 4,200 and 4,500 ringgit per tonne, driven by uncertainty in global trade and unclear US biofuel policies.
He added that import tariffs and shifting trade barriers among major economies have disrupted flows of competing vegetable oils, tightening supplies in key markets, increasing risk premiums, and triggering speculative buying that has boosted momentum in CPO prices.
He cited a notable example: China's move to impose anti-dumping duties on Canadian canola, which pushed rapeseed oil futures higher on Chinese exchanges. This rally quickly spilled over into palm oil futures, as traders repositioned across the vegetable oils market.
He also noted that changes to US biofuel policy under the 45Z programme have reshaped market dynamics by favouring domestic feedstocks over imports.
"Since soybean oil is the primary feedstock for US biodiesel production, these policy adjustments have pushed soybean oil prices higher, which has also spilled over into palm oil, driving it up alongside the rest of the vegetable oils market," he said.
Varqa affirmed that the sector's outlook remains steady, underpinned by strong exports as demand from India picks up ahead of the festive season.
"The near-term export outlook for palm oil remains positive, driven by robust festival-related demand in India. Seasonal stock-building ahead of major holidays is expected to support shipments in the coming months," he explained.
On palm oil stocks, he noted that they have surpassed the two-million-tonne mark, which he described as a temporary outcome of short-term supply and demand balances.
"The current situation (rising stocks) does not indicate a supply glut, given steady production growth, with Malaysia's planted palm oil area holding at 5 million hectares from 2012 through 2024. We therefore expect production to peak soon before declining in the fourth quarter of 2025, in line with seasonal patterns," he added.
Malaysia's palm oil stocks rose for a fifth consecutive month in July, reaching their highest level in nearly two years, as output outpaced exports, according to data from the Malaysian Palm Oil Board (MPOB).
Total stocks climbed 4.02% to 2.11 million tonnes in July, up from 2.03 million tonnes in June, the board's data showed.