The Battle for Key Price Support: Is the Palm Oil Pullback a Resurgence or a Precursor to a Trend Reversal?
2026-02-03 18:58:14
On Tuesday (February 3), palm oil futures on the Bursa Malaysia Derivatives Exchange ended their first full trading day after the long holiday, marking their second consecutive day of pullback. The benchmark April delivery contract fell 32 ringgit, or 0.76%, to 4,197 ringgit per tonne. Despite a strong start to the year, with a 4.42% monthly gain in January ending five consecutive months of decline, the current trend is clearly influenced by external markets and cautious sentiment ahead of key data releases.
Prices fell during the day, primarily driven by adjustments in spreads relative to competing vegetable oils. A trader in Kuala Lumpur noted that the market opened weakly, mainly due to the weakness in related oilseed prices. Meanwhile, market participants are holding their breath awaiting the December production forecast from the South Malaysian Palm Oil Association (SPOMMA) and the upcoming December export data from shipping surveyors. These data will provide crucial guidance for assessing the short-term supply and demand balance.
The demand side presents a complex picture. On the one hand, purchasing dynamics in major consuming countries have diverged significantly. According to data from traders cited by a well-known institution, India's palm oil imports jumped 51% in January, reaching a four-month high. This was mainly due to the significant discount of palm oil relative to soybean oil, prompting refiners to increase their purchases while reducing soybean oil imports to a 19-month low. This demand shift driven by price differences provided core support for palm oil prices. On the other hand, export data from major producing countries remained robust. Data from shipping surveyor Intertek Testing Services showed that Malaysia's palm oil product exports increased by 17.9% month-on-month in January, reaching 1.463 million tons. Furthermore, the latest data from Indonesia's Statistics Bureau shows that total exports of crude palm oil and its refined products will reach 23.61 million tons in 2025, a 9.09% increase year-on-year, confirming the resilience of global demand.
However, volatility in external markets exerted downward pressure. On Tuesday, the most actively traded soybean oil futures contract on the Dalian Commodity Exchange fell 1.13%, and palm oil futures also declined 0.29%. Although soybean oil prices on the Chicago Board of Trade (CBOT) rebounded by 1.1%, the overall weakness in related edible oil markets was transmitted to palm oil prices through competition and market sentiment. As a key player in the global vegetable oil market, palm oil prices have consistently been linked to competing commodities such as soybean oil and rapeseed oil.
In response to the current market adjustment, several institutions have provided specific analyses and predictions.
Wang Tao, a well-known technical analyst, pointed out that Malaysian palm oil contracts may test the support level of 4201 ringgit per ton. If this level is clearly broken, it could trigger a further slide towards the 4115-4158 ringgit range. This technical analysis provides short-term traders with a clear risk observation point.
Analysts at Kenanga Futures offered a more comprehensive perspective in their report. They believe the lower palm oil price was primarily dragged down by weaker competitive edible oil prices overnight. However, they also highlighted three key factors limiting downside risks: strong tropical oil export demand, lower production expectations, and the relatively weak ringgit. Based on this, Kenanga Futures projects support for crude palm oil futures at 4,140 ringgit per tonne and resistance at 4,280 ringgit per tonne. At Tuesday's close, the BMD April contract settled at 4,213 ringgit per tonne, down 16 ringgit, right in the upper-middle of its forecast range.
In summary, the palm oil market is currently in a phase of intense competition between bullish and bearish factors. Downward pressure mainly stems from short-term technical adjustments, volatility in external vegetable oil markets, and position management ahead of key monthly data releases. However, the market's bottom support is equally solid, rooted in real demand driven by significant price spread advantages (such as changes in Indian sourcing strategies), robust shipment data from major exporting countries, and a supply outlook that may tighten due to seasonal factors. The movement of the Malaysian Ringgit exchange rate also warrants continued monitoring, as it directly impacts the export competitiveness of Malaysian palm oil priced in US dollars.
The future market trend will depend on the ebb and flow of several forces. First, the upcoming release of Malaysia's December production data will be crucial in verifying the strength of expected production cuts. Second, the sustainability of purchases by major importing countries like India, and whether price fluctuations will alter this trend. Finally, the impact of weather in global soybean-producing regions and crude oil price volatility on the biofuel theme will also indirectly affect the palm oil market through a complex chain.
Despite short-term market adjustment pressures, the core demand logic remains intact. Looking at the longer term, if production growth falls short of expectations while consumption remains resilient, the market may resume its upward trend. Of course, any optimistic outlook for the long term must be based on a full digestion of the aforementioned short-term pressures and uncertainties. Traders should remain cautious at present, closely monitoring the release of fundamental data and the resonance with external market sentiment to capture the new direction emerging after the market chooses between key support and resistance levels.
Fundamentals and Spread Structure: A Mix of Bullish and Bearish Factors
Prices fell during the day, primarily driven by adjustments in spreads relative to competing vegetable oils. A trader in Kuala Lumpur noted that the market opened weakly, mainly due to the weakness in related oilseed prices. Meanwhile, market participants are holding their breath awaiting the December production forecast from the South Malaysian Palm Oil Association (SPOMMA) and the upcoming December export data from shipping surveyors. These data will provide crucial guidance for assessing the short-term supply and demand balance.
The demand side presents a complex picture. On the one hand, purchasing dynamics in major consuming countries have diverged significantly. According to data from traders cited by a well-known institution, India's palm oil imports jumped 51% in January, reaching a four-month high. This was mainly due to the significant discount of palm oil relative to soybean oil, prompting refiners to increase their purchases while reducing soybean oil imports to a 19-month low. This demand shift driven by price differences provided core support for palm oil prices. On the other hand, export data from major producing countries remained robust. Data from shipping surveyor Intertek Testing Services showed that Malaysia's palm oil product exports increased by 17.9% month-on-month in January, reaching 1.463 million tons. Furthermore, the latest data from Indonesia's Statistics Bureau shows that total exports of crude palm oil and its refined products will reach 23.61 million tons in 2025, a 9.09% increase year-on-year, confirming the resilience of global demand.
However, volatility in external markets exerted downward pressure. On Tuesday, the most actively traded soybean oil futures contract on the Dalian Commodity Exchange fell 1.13%, and palm oil futures also declined 0.29%. Although soybean oil prices on the Chicago Board of Trade (CBOT) rebounded by 1.1%, the overall weakness in related edible oil markets was transmitted to palm oil prices through competition and market sentiment. As a key player in the global vegetable oil market, palm oil prices have consistently been linked to competing commodities such as soybean oil and rapeseed oil.
Institutional view: Support and resistance coexist; pay attention to key price levels.
In response to the current market adjustment, several institutions have provided specific analyses and predictions.
Wang Tao, a well-known technical analyst, pointed out that Malaysian palm oil contracts may test the support level of 4201 ringgit per ton. If this level is clearly broken, it could trigger a further slide towards the 4115-4158 ringgit range. This technical analysis provides short-term traders with a clear risk observation point.
Analysts at Kenanga Futures offered a more comprehensive perspective in their report. They believe the lower palm oil price was primarily dragged down by weaker competitive edible oil prices overnight. However, they also highlighted three key factors limiting downside risks: strong tropical oil export demand, lower production expectations, and the relatively weak ringgit. Based on this, Kenanga Futures projects support for crude palm oil futures at 4,140 ringgit per tonne and resistance at 4,280 ringgit per tonne. At Tuesday's close, the BMD April contract settled at 4,213 ringgit per tonne, down 16 ringgit, right in the upper-middle of its forecast range.
Market Outlook and Key Focus
In summary, the palm oil market is currently in a phase of intense competition between bullish and bearish factors. Downward pressure mainly stems from short-term technical adjustments, volatility in external vegetable oil markets, and position management ahead of key monthly data releases. However, the market's bottom support is equally solid, rooted in real demand driven by significant price spread advantages (such as changes in Indian sourcing strategies), robust shipment data from major exporting countries, and a supply outlook that may tighten due to seasonal factors. The movement of the Malaysian Ringgit exchange rate also warrants continued monitoring, as it directly impacts the export competitiveness of Malaysian palm oil priced in US dollars.
The future market trend will depend on the ebb and flow of several forces. First, the upcoming release of Malaysia's December production data will be crucial in verifying the strength of expected production cuts. Second, the sustainability of purchases by major importing countries like India, and whether price fluctuations will alter this trend. Finally, the impact of weather in global soybean-producing regions and crude oil price volatility on the biofuel theme will also indirectly affect the palm oil market through a complex chain.
Despite short-term market adjustment pressures, the core demand logic remains intact. Looking at the longer term, if production growth falls short of expectations while consumption remains resilient, the market may resume its upward trend. Of course, any optimistic outlook for the long term must be based on a full digestion of the aforementioned short-term pressures and uncertainties. Traders should remain cautious at present, closely monitoring the release of fundamental data and the resonance with external market sentiment to capture the new direction emerging after the market chooses between key support and resistance levels.
- 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.
