Palm oil weakness continues for the third day: a tug-of-war between bulls and bears amid currency pressure and a policy vacuum.
2026-02-12 18:49:46
On Thursday (February 12), the benchmark April palm oil contract on the Malaysian Derivatives Exchange closed at 4,037 ringgit per tonne, down 24 ringgit or 0.59%. This marks the third consecutive trading day of decline for the most active contract. The market, lacking clear bullish guidance, failed to escape the dual pressure from exchange rates and the Dalian Commodity Exchange's edible oil sector.
The most direct driver of the day's market movement came from the exchange rate. The ringgit strengthened by 0.31% against the US dollar, making palm oil, priced in its own currency, more expensive for foreign buyers. Kang Wei Cheang, an analyst at StoneX, a well-known Singaporean agricultural products firm, pointed out: "The continued strengthening of the ringgit is weakening export competitiveness and suppressing spot purchasing intentions. At the same time, the decline in Dalian Commodity Exchange palm oil contracts is transmitting pressure from the entire vegetable oil sector."
Looking at the performance of related commodities, the Dalian Commodity Exchange's most active soybean oil contract fell 0.22%, while palm oil contracts dropped by 1.5%. Overnight, Chicago soybean oil futures rebounded slightly by 0.81%, but failed to provide a significant boost to Asian trading. Market participants believe that the price difference between palm oil and soybean oil is still in a phase of needing to be corrected, and the current wait-and-see attitude of overseas buyers is directly related to this.
The palm oil price outlook conference currently being held in Kuala Lumpur failed to provide sufficient bullish signals in the near term. Several participating traders stated that discussions were mixed, with neither side able to reach a clear directional consensus. StoneX commented that "no new short-term bullish catalysts emerged at the conference."
This marks the third consecutive week that the palm oil market has been in a de facto policy lull. The Malaysian Palm Oil Board website shows that the country has raised its March crude palm oil reference price while maintaining the 9% export tax rate. This move was expected by the market and had virtually no marginal impact on prices.
Market focus is gradually shifting south. A survey by a well-known institution shows that Indonesia's suspension of plans to increase biodiesel blending ratios is being interpreted by many traders as a weakening of the country's policy intention to prioritize domestic industrial use. Analysts generally believe that this decision, coupled with expectations of seasonal production increases in the coming months, will put upward pressure on palm oil prices.
However, some voices caution against an overly bearish outlook. Some institutions point out that global demand remains resilient, and coupled with the overall slowdown in output growth in producing regions, the downside potential for prices may be limited.
Julian McGill, founder and managing director of Glencore Economics, offered another perspective on planting: despite recent land acquisitions by the Indonesian government's forestry task force that have disrupted some plantations, palm oil seed sales data from 2025 indicate that planting activity in the country has not substantially contracted. This means that the potential resilience of production capacity remains ample should the policy environment or price conditions change.
Based on current market performance and various institutional opinions, palm oil is currently at a relatively low level, characterized by "weak reality and unmet strong expectations." The short-term trend of the Malaysian Ringgit remains the most direct high-frequency variable affecting Malaysian palm oil pricing. Meanwhile, whether the Dalian Commodity Exchange's edible oil sector can establish support at current levels will determine whether cross-market arbitrage funds will further reduce their positions and exit the market.
From a fundamental perspective, market focus is shifting from February export data to the rate of production recovery after March. Indonesian policy signals have shown signs of adjustment; if no further supply-tightening measures are introduced, market recovery will depend more on the overall stabilization of the external vegetable oil market.
It's worth noting that current price levels have partially priced in the expected exhaustion of the positive impact of the end of the production cut season, but the formation of new bullish themes still requires further confirmation from supply and demand data from producing regions after March. In terms of trading logic, the focus of the current game is shifting from the previous destocking pace to the pace and magnitude of new supply releases.
The ringgit remains firm, becoming a key resistance level in the short term.
The most direct driver of the day's market movement came from the exchange rate. The ringgit strengthened by 0.31% against the US dollar, making palm oil, priced in its own currency, more expensive for foreign buyers. Kang Wei Cheang, an analyst at StoneX, a well-known Singaporean agricultural products firm, pointed out: "The continued strengthening of the ringgit is weakening export competitiveness and suppressing spot purchasing intentions. At the same time, the decline in Dalian Commodity Exchange palm oil contracts is transmitting pressure from the entire vegetable oil sector."
Looking at the performance of related commodities, the Dalian Commodity Exchange's most active soybean oil contract fell 0.22%, while palm oil contracts dropped by 1.5%. Overnight, Chicago soybean oil futures rebounded slightly by 0.81%, but failed to provide a significant boost to Asian trading. Market participants believe that the price difference between palm oil and soybean oil is still in a phase of needing to be corrected, and the current wait-and-see attitude of overseas buyers is directly related to this.
Industry conferences lacked novelty, and policy signals entered a period of silence.
The palm oil price outlook conference currently being held in Kuala Lumpur failed to provide sufficient bullish signals in the near term. Several participating traders stated that discussions were mixed, with neither side able to reach a clear directional consensus. StoneX commented that "no new short-term bullish catalysts emerged at the conference."
This marks the third consecutive week that the palm oil market has been in a de facto policy lull. The Malaysian Palm Oil Board website shows that the country has raised its March crude palm oil reference price while maintaining the 9% export tax rate. This move was expected by the market and had virtually no marginal impact on prices.
Indonesian Developments: B40 Expansion Pauses and Potential Resilience in Plantation Development
Market focus is gradually shifting south. A survey by a well-known institution shows that Indonesia's suspension of plans to increase biodiesel blending ratios is being interpreted by many traders as a weakening of the country's policy intention to prioritize domestic industrial use. Analysts generally believe that this decision, coupled with expectations of seasonal production increases in the coming months, will put upward pressure on palm oil prices.
However, some voices caution against an overly bearish outlook. Some institutions point out that global demand remains resilient, and coupled with the overall slowdown in output growth in producing regions, the downside potential for prices may be limited.
Julian McGill, founder and managing director of Glencore Economics, offered another perspective on planting: despite recent land acquisitions by the Indonesian government's forestry task force that have disrupted some plantations, palm oil seed sales data from 2025 indicate that planting activity in the country has not substantially contracted. This means that the potential resilience of production capacity remains ample should the policy environment or price conditions change.
Short-term logic and market focus
Based on current market performance and various institutional opinions, palm oil is currently at a relatively low level, characterized by "weak reality and unmet strong expectations." The short-term trend of the Malaysian Ringgit remains the most direct high-frequency variable affecting Malaysian palm oil pricing. Meanwhile, whether the Dalian Commodity Exchange's edible oil sector can establish support at current levels will determine whether cross-market arbitrage funds will further reduce their positions and exit the market.
From a fundamental perspective, market focus is shifting from February export data to the rate of production recovery after March. Indonesian policy signals have shown signs of adjustment; if no further supply-tightening measures are introduced, market recovery will depend more on the overall stabilization of the external vegetable oil market.
It's worth noting that current price levels have partially priced in the expected exhaustion of the positive impact of the end of the production cut season, but the formation of new bullish themes still requires further confirmation from supply and demand data from producing regions after March. In terms of trading logic, the focus of the current game is shifting from the previous destocking pace to the pace and magnitude of new supply releases.
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