The palm oil price continued to fall for the second time in a row, falling to its lowest level since two weeks due in part because of a combination of weak crude oil market conditions and softer Malaysian export figures.
This move is part of a wider reassessment on the energy and vegetable oils markets, as traders react to lower fuel prices, slower shipments and competition from other oils.
The market closely monitors the level of 4,000 ringgit per ton, and Friday’s futures dropped below that.
Crude oil prices are influenced by the price of crude oil
Palm oil fell after crude oil suffered its worst annual decline since 2020.
The markets have struggled with the combination of global supply growth and geopolitical risk, which has capped prices recovery.
West Texas Intermediate crude dropped 0.9% to $57.42 on Wednesday, marking the end of a 20-year decline.
Palm oil is one of the main feedstocks for biodiesel, and lower oil prices reduce its demand.
The pressure on the vegetable oil industry was evident.
The price of soybean oil, the closest competitor to palm oil in food and fuel markets closed at 1.8% less on Wednesday. This accentuated the downward trend and limited demand for substitution.
Export data adds pressure
Export figures from Malaysia, along with the weakness of the energy markets, also weighed heavily on sentiment.
AmSpec data shows that palm oil shipments from the second largest producer in the world fell by 5% on a month-to-month basis to 1,2 million tonnes.
Palm oil futures fell further from their recent ranges due to the weaker shipment figures.
Export performance was weaker than expected, suggesting that near-term consumer demand is still subdued despite seasonal influences which often boost consumption at the end of each year.
According to the latest data, the demand for the products hasn’t yet increased significantly at the end the year.
The cautious attitude is reflected in the prices of contracts related to Asia.
The price of refined palm oil on China’s Dalian Commodity Exchange for delivery in May fell by 0.9%, to 8,584 Yuan per ton. Meanwhile, soybean oil was unchanged at 7,862 Yuan per ton.
Demand Seasonal ahead
The attention of the market is shifting to potential purchases linked with upcoming festival.
The demand for products ahead of Ramadan and the Lunar New Year in February 2026 will likely support the consumption. This is especially true if the prices stay below the threshold of 4,000 ringgit per ton.
The market’s current levels are seen to be attractive for bargain buying, and could stabilize prices following the recent decline.
Restocking during the season typically boosts purchases in major import regions. This can provide some relief to current economic headwinds.
Palm oil is currently caught in a bind between the falling prices of energy and weakened exports, on one hand, and festival demand, on the other.
The price direction will likely continue to be determined by crude oil exports and movements in Malaysia.
As new information becomes available, this post Malaysia palm oil falls as crude oil loss and export slowdown clash may be updated.
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