On Wednesday (February 11), the benchmark April palm oil futures contract on the Bursa Malaysia Derivatives Exchange closed at 4,060 ringgit per tonne, down 35 ringgit or 0.85%. The initial upward momentum failed to hold, and the contract trended lower throughout the day, marking its second consecutive day of decline. Market focus was heavily on the Palm Oil Price Outlook Conference (POC) held in Kuala Lumpur that day. The opinions expressed by several key industry figures created a balance between bullish and bearish sentiment, leading to a downward correction as the market digested the information.



External markets also lacked support. The most active soybean oil contract on the Dalian Commodity Exchange fell slightly by 0.05%, while the most active palm oil contract fell by 0.69%; the most active soybean oil contract on the Chicago Board of Trade also closed down 0.54%. The price spread between palm oil and competing edible oils continues to exert downward pressure, but at this stage, the expectation-driven game based on its own fundamentals is dominant.

The supply side is releasing two different signals across two timeframes. The market has already priced in short-term inventory pressure easing, with Malaysian palm oil stocks falling 7.72% month-on-month at the end of January, the first decline in 11 months. This destocking was driven by a surge in exports and production falling to a 10-month low. However, in early February, shipping survey data quickly reversed this optimistic outlook: AmSpec Agri showed a sharp 14.3% month-on-month decrease in exports from February 1st to 10th, while Intertek Testing Services reported a 10.5% decline. Ramadan stockpiling demand has not yet been reflected in shipping data, increasing market concerns about the actual pace of procurement.

Significant disagreement exists regarding the medium- to long-term production outlook. Industry analyst Dorab Mistry stated at the POC conference that, barring new weather disruptions, the Malaysian palm oil futures main contract will primarily fluctuate between 3800 and 4300 ringgit per tonne from now until July 2026. The core logic lies in the structural contradiction between ample supply and weak demand, which is unlikely to be resolved in the short term. This projected range is less than 100 ringgit below the current price support level, putting downward pressure on market sentiment.

In Indonesia, GAPKI disclosed that the country's crude palm oil production reached 51.98 million tons in 2025, an increase of 8% year-on-year. For 2026, GAPKI predicts the growth rate will narrow to 2-3%. This assessment of slower growth echoes the assessment of Julian McGill, Managing Director of Glenauk Economics. McGill pointed out at the Proof of Production (POC) conference that the overall pace of global palm oil production expansion will slow in 2026, with Indonesian production expected to increase by 600,000 tons, while Malaysian production will decline to 19.7 million tons. These forecasts imply that although the market is currently constrained by weak demand, a slowdown in long-term supply may become an important narrative supporting the price level.

Demand-side expectations are showing marginal improvement. Renowned analyst Thomas Mielke stated during the conference that purchases from major importers India and China are expected to gradually recover between January and April this year, with importer inventories likely to decline during the same period. This assessment attempts to correct the market's stereotype of persistently weak purchasing intentions from major buyers. It's worth noting that this expectation contrasts with the weak export data from early February—suggesting a possible delay in seasonal restocking rather than a disappearance of demand. Shipment performance over the next three weeks will be crucial in validating this assessment.

In summary, the POC meeting did not provide a clear one-sided driver, and the distribution of opinions showed a clear near-bearish and far-bullish structure. From a short-term perspective, the sharp drop in exports and the anticipated trading range for Mistry are exerting substantial downward pressure on market sentiment. From a medium- to long-term perspective, the slowdown in Indonesian production growth and the downward revision of Malaysian absolute production provide downside protection for valuations. These two perspectives are not contradictory but rather a normal reflection of the market's pricing focus at different time dimensions—the current market is choosing to trade the near-month reality.

The focus going forward should be on the actual pace of Ramadan stockpiling and the extent to which major importing countries fulfill their purchase obligations. If shipping data from late February fails to show marginal improvement, the current weak trend may continue. Conversely, if Mielke's anticipated rebound in purchases is validated on the shipping side, palm oil is expected to bottom out and test the midpoint of its trading range. Furthermore, while the implementation of Indonesia's B40 biodiesel policy was not a focus at this meeting, its guiding effect on domestic consumption cannot be ignored.