Palm oil breaks through key resistance: Can policy support continue to drive a new price range?
2026-01-16 18:42:54
On Friday (January 16), palm oil futures on the Bursa Malaysia Derivatives Exchange (BMD) closed higher, with the benchmark contract recording a significant gain. The most actively traded April contract rose 81 ringgit, or 2.03%, to settle at 4,071 ringgit per tonne, successfully breaking through the key psychological and technical level of 4,100 ringgit and marking its second consecutive week of gains. Today's strong market performance was mainly supported by a combination of positive external market policy news and strong domestic fundamental data.
The primary driver of today's market is a key policy development. According to reports from reputable institutions, sources indicate that the US government plans to finalize the 2026 Restricted Biofuel Blending (RVO) quotas by March of this year. More importantly, the plan is expected to maintain its initial proposal's overall biofuel blending growth target (compared to 2025 levels) while simultaneously abandoning a proposed plan to penalize imported renewable fuels and feedstocks. This policy shift directly impacts global vegetable oil demand expectations.
David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X, interpreted the market rally as stemming from the strength of the soybean oil market, against the backdrop of the Trump administration's announcement of plans to introduce biofuel quotas by the end of March. This move is likely to boost overall demand for soybean oil, thereby bolstering market sentiment for palm oil. He further provided specific price predictions, believing that "crude palm oil futures are expected to find support at 4,000 ringgit per tonne and face resistance at 4,100 ringgit." Today's price action has broken through the resistance level he indicated, showing that market buying sentiment is stronger than some analysts' initial expectations. The policy expectation first pushed up soybean oil prices on the Chicago Board of Trade (CBOT) and the Dalian Commodity Exchange. As an important player in the global vegetable oil market, palm oil prices have always been highly correlated with competing oils such as soybean oil, thus receiving a direct spillover boost.
Aside from external policy factors, the fundamentals of palm oil itself also provided positive signals today. Data released by a shipping survey agency showed that Malaysian palm oil exports from January 1st to 15th increased by between 17.5% and 18.6% compared to the same period last month. This significant rebound effectively alleviated market concerns about high inventories and weak demand in major consuming countries, providing a realistic basis for price increases.
Meanwhile, exchange rate factors also provided a mild boost. The ringgit, the currency used to price palm oil, weakened slightly by 0.07% against the US dollar today. This makes dollar-denominated palm oil slightly less expensive for buyers holding foreign currency, theoretically stimulating purchasing demand.
Another significant positive development occurred today. U.S. Customs and Border Protection issued a statement announcing the lifting of the import ban on products from Malaysian palm oil giant FGV Holdings, which had been in place since 2020 due to allegations of forced labor. The statement indicated that, after assessment, FGV was deemed to have taken sufficient steps to resolve the issues, and effective immediately, its palm oil and related products will be permitted to enter the U.S. market, provided they comply with other U.S. laws.
In response, FGV Group CEO Fakhrunniam Othman stated, "This outcome demonstrates that our commitment to responsible and ethical practices enables FGV to meet international standards and maintain access to key markets such as the United States." He emphasized that the rights, welfare, and voice of employees remain at the heart of its operations. The lifting of this ban removes a major trade barrier that has plagued the Malaysian palm oil industry for years, directly benefiting not only FGV but also significantly improving the trade environment and industry image for the entire Malaysian palm oil sector's exports to the United States, thus supporting long-term market confidence.
Looking at today's market, the logic behind the rise is clear: in the short term, it was driven by new expectations of increased demand from the US biofuel policy; in the medium term, it was validated by improved export data; and in the long term, it was supported by the removal of major trade barriers. These multiple factors combined to drive a breakthrough price increase.
However, market participants still need to remain calm. Although the final biofuel quota plan is said to be close to the initial proposal of "increasing the total amount," its specific figures and implementation details still await final confirmation before March, leaving uncertainty. Furthermore, the current volatility in international crude oil prices has weakened the cost advantage of palm oil as a biodiesel feedstock, which will, to some extent, limit its upside potential based on biodiesel demand. Therefore, although today's price surge was strong, the sustainability of future trends will heavily depend on the final implementation of the US RVO policy, when Malaysian palm oil production will reach its inflection point (which will affect the speed of inventory rebuilding), and whether the continued restocking demand from major importing countries can be confirmed.
Iceberg X trader David Ng clearly pointed out that the market rally was directly related to the strength of soybean oil and the US biofuel quota plan, and gave a key price range of 4000-4100 ringgit. Today's price action has broken through the resistance level he mentioned; whether the market can hold above this level will be a crucial test of the bullish momentum.
FGV Group management responded to the US lifting of the ban by stating that "this reflects our significant progress in upholding labor standards, bridging gaps, and implementing sustainable reforms throughout our operations and supply chain," emphasizing that improved corporate governance is the fundamental reason for regaining market access.
Overall, January 16, 2026 marks the beginning of a new trading range for the palm oil market, driven by policy expectations and an improved trade environment. Market sentiment has clearly shifted towards optimism, but the future path will depend on whether these expectations can be successfully translated into substantial demand, as well as changes on the supply side. Traders should closely monitor the official release of subsequent US policy documents, monthly data from the Malaysian Palm Oil Board (MPOB), and purchasing dynamics from major consuming countries.
Key driver: Expectations of US biofuel policy guide market sentiment.
The primary driver of today's market is a key policy development. According to reports from reputable institutions, sources indicate that the US government plans to finalize the 2026 Restricted Biofuel Blending (RVO) quotas by March of this year. More importantly, the plan is expected to maintain its initial proposal's overall biofuel blending growth target (compared to 2025 levels) while simultaneously abandoning a proposed plan to penalize imported renewable fuels and feedstocks. This policy shift directly impacts global vegetable oil demand expectations.
David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X, interpreted the market rally as stemming from the strength of the soybean oil market, against the backdrop of the Trump administration's announcement of plans to introduce biofuel quotas by the end of March. This move is likely to boost overall demand for soybean oil, thereby bolstering market sentiment for palm oil. He further provided specific price predictions, believing that "crude palm oil futures are expected to find support at 4,000 ringgit per tonne and face resistance at 4,100 ringgit." Today's price action has broken through the resistance level he indicated, showing that market buying sentiment is stronger than some analysts' initial expectations. The policy expectation first pushed up soybean oil prices on the Chicago Board of Trade (CBOT) and the Dalian Commodity Exchange. As an important player in the global vegetable oil market, palm oil prices have always been highly correlated with competing oils such as soybean oil, thus receiving a direct spillover boost.
Fundamental Analysis: Recovering Export Data and Monetary Factors
Aside from external policy factors, the fundamentals of palm oil itself also provided positive signals today. Data released by a shipping survey agency showed that Malaysian palm oil exports from January 1st to 15th increased by between 17.5% and 18.6% compared to the same period last month. This significant rebound effectively alleviated market concerns about high inventories and weak demand in major consuming countries, providing a realistic basis for price increases.
Meanwhile, exchange rate factors also provided a mild boost. The ringgit, the currency used to price palm oil, weakened slightly by 0.07% against the US dollar today. This makes dollar-denominated palm oil slightly less expensive for buyers holding foreign currency, theoretically stimulating purchasing demand.
Major industry event: The United States lifts the import ban on FGV.
Another significant positive development occurred today. U.S. Customs and Border Protection issued a statement announcing the lifting of the import ban on products from Malaysian palm oil giant FGV Holdings, which had been in place since 2020 due to allegations of forced labor. The statement indicated that, after assessment, FGV was deemed to have taken sufficient steps to resolve the issues, and effective immediately, its palm oil and related products will be permitted to enter the U.S. market, provided they comply with other U.S. laws.
In response, FGV Group CEO Fakhrunniam Othman stated, "This outcome demonstrates that our commitment to responsible and ethical practices enables FGV to meet international standards and maintain access to key markets such as the United States." He emphasized that the rights, welfare, and voice of employees remain at the heart of its operations. The lifting of this ban removes a major trade barrier that has plagued the Malaysian palm oil industry for years, directly benefiting not only FGV but also significantly improving the trade environment and industry image for the entire Malaysian palm oil sector's exports to the United States, thus supporting long-term market confidence.
Market Logic and Future Focus
Looking at today's market, the logic behind the rise is clear: in the short term, it was driven by new expectations of increased demand from the US biofuel policy; in the medium term, it was validated by improved export data; and in the long term, it was supported by the removal of major trade barriers. These multiple factors combined to drive a breakthrough price increase.
However, market participants still need to remain calm. Although the final biofuel quota plan is said to be close to the initial proposal of "increasing the total amount," its specific figures and implementation details still await final confirmation before March, leaving uncertainty. Furthermore, the current volatility in international crude oil prices has weakened the cost advantage of palm oil as a biodiesel feedstock, which will, to some extent, limit its upside potential based on biodiesel demand. Therefore, although today's price surge was strong, the sustainability of future trends will heavily depend on the final implementation of the US RVO policy, when Malaysian palm oil production will reach its inflection point (which will affect the speed of inventory rebuilding), and whether the continued restocking demand from major importing countries can be confirmed.
Institutional Views Focus
Iceberg X trader David Ng clearly pointed out that the market rally was directly related to the strength of soybean oil and the US biofuel quota plan, and gave a key price range of 4000-4100 ringgit. Today's price action has broken through the resistance level he mentioned; whether the market can hold above this level will be a crucial test of the bullish momentum.
FGV Group management responded to the US lifting of the ban by stating that "this reflects our significant progress in upholding labor standards, bridging gaps, and implementing sustainable reforms throughout our operations and supply chain," emphasizing that improved corporate governance is the fundamental reason for regaining market access.
Overall, January 16, 2026 marks the beginning of a new trading range for the palm oil market, driven by policy expectations and an improved trade environment. Market sentiment has clearly shifted towards optimism, but the future path will depend on whether these expectations can be successfully translated into substantial demand, as well as changes on the supply side. Traders should closely monitor the official release of subsequent US policy documents, monthly data from the Malaysian Palm Oil Board (MPOB), and purchasing dynamics from major consuming countries.
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- 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.
