After surpassing the $4,000 mark, has short-term demand for palm oil lagged behind? — Bullish and bearish logic is converging.
2025-12-15 18:27:08
Palm oil futures on the Malaysian Derivatives Exchange (BMD) closed lower on Monday (December 15). The benchmark February contract fell 12 ringgit, or 0.3%, to 4,006 ringgit per tonne. The market traded within a relatively narrow range recently, with significant resistance at the upside. Intraday trading was mainly constrained by two factors: significant weakness in competitive edible oil products on the Dalian Commodity Exchange in China, and a slight strengthening of the Malaysian ringgit against the US dollar.
A Kuala Lumpur trader commented, "Futures prices are still fluctuating between 4,000 and 4,100 ringgit, mainly following the weakness in the Dalian market and the strengthening of the ringgit." This observation directly points to the core driver of the market today. In the afternoon Beijing time, the most active soybean oil contract on the Dalian Commodity Exchange fell 0.95%, and the palm oil contract declined 0.96%, creating direct price pressure. Meanwhile, the ringgit appreciated slightly against the US dollar by 0.07%, a small increase, but enough to dampen the purchasing intentions of dollar-denominated buyers. Palm oil prices have long been benchmarked against other major vegetable oils, including soybean oil, and its relative price changes directly affect the global demand distribution.
The latest high-frequency export data confirms the weakness in demand. Data from independent testing agency AmSpec Agri Malaysia shows that from December 1st to 15th, Malaysian palm oil product exports fell by 16.4% compared to the same period last month. Data from another agency, Intertek Testing Services, shows a decline of 15.9%. The significant drop in exports at the beginning of the month has exacerbated market concerns about whether year-end demand can remain strong, providing a direct negative factor for prices.
Despite short-term downward pressure, many institutions and analysts have shifted their focus to longer-term supporting factors. The fundamentals present a complex mix of bullish and bearish factors.
A leading industry group cited data from a prominent organization indicating that India, the world's largest importer of palm oil, experienced a favorable shift in its import structure in November. Due to its price advantage, Indian refiners increased their palm oil purchases while reducing imports of more expensive soybean and sunflower oils. This suggests that palm oil remains highly competitive in price-sensitive markets, and its demand elasticity is expected to be reflected when price differentials widen.
On the other hand, fluctuations in the energy market provide potential long-term support for the industrial demand side of palm oil—biodiesel. Today, Beijing time, international crude oil prices climbed, mainly due to concerns about supply disruptions stemming from geopolitical factors. As a feedstock for biodiesel, higher crude oil prices enhance the attractiveness and economic viability of palm oil in the energy sector. A senior industry analyst pointed out: "Every significant rise in crude oil prices reshapes the cost advantage boundary of palm oil as a feedstock for biodiesel, and this correlation is a clear long-term bullish factor in major producing countries with stable policies."
The current market is caught in a struggle between short-term pressure and long-term potential. Looking at the charts, prices encountered resistance at key technical levels and retreated. Combined with weak export data, a short-term correction is evident. However, this correction is insufficient to constitute a trend reversal; it is more of a digestion of unfavorable marginal information after the previous continuous rise.
Investors need to carefully distinguish the driving logic across different timeframes. In the short term, market focus will be on the recovery of Malaysian exports throughout December, fluctuations in the ringgit exchange rate, and changes in competing edible oil prices. In particular, sentiment in the Dalian edible oil market will continue to exert a significant intraday pull on palm oil futures.
From a medium- to long-term perspective, the structural bullish factors have not disappeared and may even be strengthened by the current price correction. The adjustment of purchasing strategies by major consuming countries like India based on price differences demonstrates palm oil's core advantage in price competition. More importantly, any tension in the global energy market could be rapidly transmitted to the palm oil market through the biodiesel chain, creating an upward drive independent of edible demand.
In summary, the palm oil market is at a critical juncture. The price fluctuations around key psychological levels reflect the divergence in opinions between bulls and bears regarding the future market outlook. For professional traders, the current volatile market may present opportunities, but more importantly, it necessitates a more refined approach to filtering out information noise and shifting focus from short-term data volatility to the supply-demand balance and energy price ratios that determine the long-term pricing center. In the coming weeks, the market needs new and strong drivers to break out of the current trading range, whether it's weather disruptions on the supply side or unexpectedly strong demand-side purchase orders.
Dual pressures from the demand side and exchange rates
A Kuala Lumpur trader commented, "Futures prices are still fluctuating between 4,000 and 4,100 ringgit, mainly following the weakness in the Dalian market and the strengthening of the ringgit." This observation directly points to the core driver of the market today. In the afternoon Beijing time, the most active soybean oil contract on the Dalian Commodity Exchange fell 0.95%, and the palm oil contract declined 0.96%, creating direct price pressure. Meanwhile, the ringgit appreciated slightly against the US dollar by 0.07%, a small increase, but enough to dampen the purchasing intentions of dollar-denominated buyers. Palm oil prices have long been benchmarked against other major vegetable oils, including soybean oil, and its relative price changes directly affect the global demand distribution.
The latest high-frequency export data confirms the weakness in demand. Data from independent testing agency AmSpec Agri Malaysia shows that from December 1st to 15th, Malaysian palm oil product exports fell by 16.4% compared to the same period last month. Data from another agency, Intertek Testing Services, shows a decline of 15.9%. The significant drop in exports at the beginning of the month has exacerbated market concerns about whether year-end demand can remain strong, providing a direct negative factor for prices.
Institutional View: Long-term positive factors remain, short-term structure is complex.
Despite short-term downward pressure, many institutions and analysts have shifted their focus to longer-term supporting factors. The fundamentals present a complex mix of bullish and bearish factors.
A leading industry group cited data from a prominent organization indicating that India, the world's largest importer of palm oil, experienced a favorable shift in its import structure in November. Due to its price advantage, Indian refiners increased their palm oil purchases while reducing imports of more expensive soybean and sunflower oils. This suggests that palm oil remains highly competitive in price-sensitive markets, and its demand elasticity is expected to be reflected when price differentials widen.
On the other hand, fluctuations in the energy market provide potential long-term support for the industrial demand side of palm oil—biodiesel. Today, Beijing time, international crude oil prices climbed, mainly due to concerns about supply disruptions stemming from geopolitical factors. As a feedstock for biodiesel, higher crude oil prices enhance the attractiveness and economic viability of palm oil in the energy sector. A senior industry analyst pointed out: "Every significant rise in crude oil prices reshapes the cost advantage boundary of palm oil as a feedstock for biodiesel, and this correlation is a clear long-term bullish factor in major producing countries with stable policies."
Potential shifts in market logic and future focus areas
The current market is caught in a struggle between short-term pressure and long-term potential. Looking at the charts, prices encountered resistance at key technical levels and retreated. Combined with weak export data, a short-term correction is evident. However, this correction is insufficient to constitute a trend reversal; it is more of a digestion of unfavorable marginal information after the previous continuous rise.
Investors need to carefully distinguish the driving logic across different timeframes. In the short term, market focus will be on the recovery of Malaysian exports throughout December, fluctuations in the ringgit exchange rate, and changes in competing edible oil prices. In particular, sentiment in the Dalian edible oil market will continue to exert a significant intraday pull on palm oil futures.
From a medium- to long-term perspective, the structural bullish factors have not disappeared and may even be strengthened by the current price correction. The adjustment of purchasing strategies by major consuming countries like India based on price differences demonstrates palm oil's core advantage in price competition. More importantly, any tension in the global energy market could be rapidly transmitted to the palm oil market through the biodiesel chain, creating an upward drive independent of edible demand.
In summary, the palm oil market is at a critical juncture. The price fluctuations around key psychological levels reflect the divergence in opinions between bulls and bears regarding the future market outlook. For professional traders, the current volatile market may present opportunities, but more importantly, it necessitates a more refined approach to filtering out information noise and shifting focus from short-term data volatility to the supply-demand balance and energy price ratios that determine the long-term pricing center. In the coming weeks, the market needs new and strong drivers to break out of the current trading range, whether it's weather disruptions on the supply side or unexpectedly strong demand-side purchase orders.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
