Palm Oil Poised for Annual Loss in 2025

Malaysian palm oil futures extended their decline, remaining below MYR 4,700 per tonne amid weakness in Dalian-traded edible oils. Abundant inventories added pressure, with stocks hitting a record high in September and expected to exceed 3 million tonnes by year-end amid peak seasonal production. Meanwhile, Indonesia, the top producer, lowered its November crude palm oil reference price by 6.1% to USD 978.90 per tonne, cutting combined export duty and levy by around 20% to USD 246.36 per tonne. Caution also prevailed ahead of the Malaysian Palm Oil Board's monthly report due on November 10. Still, a weaker ringgit helped limit losses, while a slight recovery in crude oil prices improved palm oil's appeal as a biodiesel feedstock. On the demand front, exports remained firm, with cargo surveyors reporting a 45.4%–73.5% monthly surge in October shipments, partly driven by pre-Diwali buying from India, the world's largest palm oil importer.

Malaysian palm oil futures fell below MYR 4,700 per tonne, reversing the previous rally as weaker crude oil prices reduced palm oil’s appeal as a biodiesel feedstock. Record-high inventories added pressure, while mixed manufacturing data from China, a major palm oil importer, offered little clarity on the demand outlook. The official PMI showed contraction, contrasting with continued expansion in the private-sector survey. Still, a weaker ringgit and firm exports limited the decline. Cargo surveyors reported a 46.9%–67.7% surge in shipments during October 1–25 from the same period in September, partly driven by pre-Diwali buying from top consumer India. Meanwhile, Malaysia’s Finance Ministry is reportedly reviewing a proposal to suspend crude palm oil export taxes as inventories are expected to exceed 3 million tonnes by year-end amid peak seasonal production. Traders will look to Malaysia's Palm Oil Board’s monthly report due November 10 for further clues on the supply-demand balance.

Malaysian palm oil futures snapped recent declines, with prices hovering near MYR 4,700 per tonne amid gains in rival edible oils and stronger crude oil prices. Markets recovered from a two-week low, as exports remained firm, with cargo surveyors reporting a 46.9%–67.7% surge in shipments during Oct. 1–25 from the same period in Sept., partly driven by pre-Diwali buying in top consumer India. Meanwhile, Malaysia’s Finance Ministry is reportedly reviewing a proposal to suspend crude palm oil export taxes as stockpiles hit a record in Sept. and are expected to top 3 million tonnes by year-end amid peak seasonal production. However, contracts are on track to post their first weekly drop in four, down around 3% so far, weighed by ample inventories. Timely rainfall between Sept. and Nov. also eased El Niño-related risks. Still, futures are on track for a monthly gain of around 1.3%, after a 5.8% decline in Sept. Traders now await China’s official PMI data for further demand signals.