Amidst the fractured consensus between bulls and bears in Malaysian palm oil, who is playing the game of a second revaluation of its "energy attributes"?
2026-05-11 18:42:13
Amid heightened volatility in the global edible oil market, Malaysian palm oil futures ended a three-day losing streak on Monday (May 11), showing signs of stabilizing at lower levels. At the close, the benchmark July palm oil contract on the Bursa Malaysia Derivatives Exchange (BMD) rose 11 ringgit, or 0.24%, to settle at 4,516 ringgit per metric tonne. This rebound was primarily driven by stronger prices in related commodities—soybean oil and crude oil.
From a market perspective, although the market still carried the momentum of last week's consecutive declines in the morning, the rise in soybean oil contracts on the Chicago Board of Trade (CBOT) and the Dalian Commodity Exchange (DCE), which are highly correlated during the Asian trading session, significantly restored bullish sentiment in palm oil. Renowned institutional traders believe that the current price level shows strong support at 4500 ringgit, while the resistance level is anchored around 4680 ringgit. This upward-trending movement reflects that the market is seeking a new equilibrium after digesting the previous negative impact of inventory levels.
As a key component of the global vegetable oil market, palm oil's price logic is inextricably linked to competing commodities and the energy market. Today, Chicago soybean oil rose 0.71%, and the Dalian soybean oil futures contract also recorded a 0.55% increase. Because palm oil and soybean oil are strong substitutes in the international market, rising soybean oil costs naturally raise the price floor for palm oil.
A more significant driving force came from the energy market. Trump's comments on the external situation triggered deep concerns about supply disruptions, particularly the continued closure of the Strait of Hormuz leading to a tightening of global crude oil supply, resulting in a significant surge in international oil prices. The strength of crude oil prices not only boosted market sentiment at the macro level but also enhanced the attractiveness of palm oil as a raw material for biodiesel at the micro level. When traditional fossil fuel prices are high and supply is limited, the industrial consumption attributes of palm oil are amplified, thus providing direct support for futures prices. Furthermore, the Malaysian ringgit depreciated slightly by 0.05% against the US dollar. Although the magnitude was limited, it objectively reduced the procurement costs for foreign currency holders, creating a marginal benefit for exports.
Despite a positive close on Monday, fundamental data remained complex. The latest data from the Malaysian Palm Oil Board (MPOB) showed that Malaysian palm oil stocks rose for the first time in four months in April. The core drivers of the increase were a strong rebound in production and increased imports, while exports in April were lackluster due to intense international competition. This disruption of the tight supply-demand balance was the main reason for the previous continuous price weakness.
Entering early May, the divergence in export data further exacerbated market uncertainty. According to research data from well-known institutions, Malaysian palm oil export forecasts for May 1st to 10th showed drastically different trends: one research institution indicated an 8.5% month-on-month increase in exports, while another independent monitoring company believed exports had decreased by 10.8% month-on-month. This difference in statistical methods and monitoring scope suggests that there is still no strong consensus on current consumer demand. If export data in the next two weeks fails to confirm a substantial recovery in demand, inventory pressure may hinder a breakthrough of the 4680 ringgit resistance level.
From a technical perspective, the rebound in palm oil prices near 4500 ringgit is a significant signal, indicating that the market has already fully priced in the negative impact of increased inventory in April. Currently, prices are trading within a range driven by both crude oil costs and high production levels. In the short term, as long as crude oil prices remain relatively strong, the biodiesel potential of palm oil will continue to drive prices, offsetting some of the downside risks from increased production.
Looking ahead, traders should pay close attention to the growth rate of Malaysian palm oil production in mid-to-late May. If production growth exceeds export growth, the upward trend in inventory will continue, and prices may face a second round of selling near resistance levels. Conversely, if exports can confirm a month-on-month growth rate of 8.5% or even higher, coupled with the continued rebound in external soybean oil prices, Malaysian palm oil is expected to break out of its current consolidation pattern and test higher technical resistance levels. In terms of trading strategy, the current market focus has shifted from purely supply-side factors to the dual logic of "energy attributes and edible oil price competition." It is recommended to closely monitor the strength of the price increase in Dalian edible oil futures, as this will be a key indicator of whether Malaysian palm oil can hold above 4500 ringgit.
Q: Why does a rise in crude oil prices directly lead to a rise in palm oil prices?
A: Palm oil is not only an edible oil but also an important raw material for biodiesel. When crude oil prices rise, the cost of fossil fuels increases, enhancing the substitution advantage of biofuels and stimulating expectations of industrial demand. At the same time, as crude oil is considered the mother of all commodities, its strength typically influences overall commodity market sentiment, prompting funds to flow into the edible oil sector.
Q: What are the medium- to long-term implications of the rebound in Malaysian inventories in April for the market trend?
A: The rise in inventory marks the transition of Malaysian palm oil from a "destocking phase" to an "inventory accumulation phase." This first increase in four months indicates emerging supply pressure, which typically sets a relatively clear upper limit on prices. Unless there is an explosive increase in exports or extreme weather impacting production, the inventory accumulation trend will prevent prices from returning to previous highs in the short term.
Q: In early May, two export agencies released data that were pointing in opposite directions. How should investors refer to this data?
A: This divergence reflects the uncertainty surrounding current trade flows. Investors should consult the MPOB's monthly report for guidance. Typically, the 8.5% growth forecast stems from temporary restocking in some key markets, while the 10.8% decline may be due to shipping delays. This discrepancy suggests that prices will likely fluctuate until more authoritative mid-month data clarifies the strength of demand.
Q: How do fluctuations in the Malaysian Ringgit exchange rate affect the international competitiveness of palm oil?
A: Palm oil is priced in the ringgit. When the ringgit depreciates against the US dollar, international buyers (holding US dollars) pay less in dollars for the same quantity of palm oil, meaning a lower price. This currency weakness typically benefits exports and attracts purchasing interest from major importing countries such as India and China.
Q: Why did the price trend of soybean oil become a support for the rebound of palm oil?
A: Soybean oil and palm oil are substitutes for each other. When soybean oil prices rise in Dalian or Chicago, palm oil's cost-effectiveness becomes more apparent. Price-sensitive buyers will switch to purchasing palm oil, thus driving a recovery in palm oil demand. Therefore, soybean oil prices are often used as a reference point for palm oil price fluctuations.
From a market perspective, although the market still carried the momentum of last week's consecutive declines in the morning, the rise in soybean oil contracts on the Chicago Board of Trade (CBOT) and the Dalian Commodity Exchange (DCE), which are highly correlated during the Asian trading session, significantly restored bullish sentiment in palm oil. Renowned institutional traders believe that the current price level shows strong support at 4500 ringgit, while the resistance level is anchored around 4680 ringgit. This upward-trending movement reflects that the market is seeking a new equilibrium after digesting the previous negative impact of inventory levels.
As a key component of the global vegetable oil market, palm oil's price logic is inextricably linked to competing commodities and the energy market. Today, Chicago soybean oil rose 0.71%, and the Dalian soybean oil futures contract also recorded a 0.55% increase. Because palm oil and soybean oil are strong substitutes in the international market, rising soybean oil costs naturally raise the price floor for palm oil.
A more significant driving force came from the energy market. Trump's comments on the external situation triggered deep concerns about supply disruptions, particularly the continued closure of the Strait of Hormuz leading to a tightening of global crude oil supply, resulting in a significant surge in international oil prices. The strength of crude oil prices not only boosted market sentiment at the macro level but also enhanced the attractiveness of palm oil as a raw material for biodiesel at the micro level. When traditional fossil fuel prices are high and supply is limited, the industrial consumption attributes of palm oil are amplified, thus providing direct support for futures prices. Furthermore, the Malaysian ringgit depreciated slightly by 0.05% against the US dollar. Although the magnitude was limited, it objectively reduced the procurement costs for foreign currency holders, creating a marginal benefit for exports.
Despite a positive close on Monday, fundamental data remained complex. The latest data from the Malaysian Palm Oil Board (MPOB) showed that Malaysian palm oil stocks rose for the first time in four months in April. The core drivers of the increase were a strong rebound in production and increased imports, while exports in April were lackluster due to intense international competition. This disruption of the tight supply-demand balance was the main reason for the previous continuous price weakness.
Entering early May, the divergence in export data further exacerbated market uncertainty. According to research data from well-known institutions, Malaysian palm oil export forecasts for May 1st to 10th showed drastically different trends: one research institution indicated an 8.5% month-on-month increase in exports, while another independent monitoring company believed exports had decreased by 10.8% month-on-month. This difference in statistical methods and monitoring scope suggests that there is still no strong consensus on current consumer demand. If export data in the next two weeks fails to confirm a substantial recovery in demand, inventory pressure may hinder a breakthrough of the 4680 ringgit resistance level.
From a technical perspective, the rebound in palm oil prices near 4500 ringgit is a significant signal, indicating that the market has already fully priced in the negative impact of increased inventory in April. Currently, prices are trading within a range driven by both crude oil costs and high production levels. In the short term, as long as crude oil prices remain relatively strong, the biodiesel potential of palm oil will continue to drive prices, offsetting some of the downside risks from increased production.
Looking ahead, traders should pay close attention to the growth rate of Malaysian palm oil production in mid-to-late May. If production growth exceeds export growth, the upward trend in inventory will continue, and prices may face a second round of selling near resistance levels. Conversely, if exports can confirm a month-on-month growth rate of 8.5% or even higher, coupled with the continued rebound in external soybean oil prices, Malaysian palm oil is expected to break out of its current consolidation pattern and test higher technical resistance levels. In terms of trading strategy, the current market focus has shifted from purely supply-side factors to the dual logic of "energy attributes and edible oil price competition." It is recommended to closely monitor the strength of the price increase in Dalian edible oil futures, as this will be a key indicator of whether Malaysian palm oil can hold above 4500 ringgit.
Frequently Asked Questions
Q: Why does a rise in crude oil prices directly lead to a rise in palm oil prices?
A: Palm oil is not only an edible oil but also an important raw material for biodiesel. When crude oil prices rise, the cost of fossil fuels increases, enhancing the substitution advantage of biofuels and stimulating expectations of industrial demand. At the same time, as crude oil is considered the mother of all commodities, its strength typically influences overall commodity market sentiment, prompting funds to flow into the edible oil sector.
Q: What are the medium- to long-term implications of the rebound in Malaysian inventories in April for the market trend?
A: The rise in inventory marks the transition of Malaysian palm oil from a "destocking phase" to an "inventory accumulation phase." This first increase in four months indicates emerging supply pressure, which typically sets a relatively clear upper limit on prices. Unless there is an explosive increase in exports or extreme weather impacting production, the inventory accumulation trend will prevent prices from returning to previous highs in the short term.
Q: In early May, two export agencies released data that were pointing in opposite directions. How should investors refer to this data?
A: This divergence reflects the uncertainty surrounding current trade flows. Investors should consult the MPOB's monthly report for guidance. Typically, the 8.5% growth forecast stems from temporary restocking in some key markets, while the 10.8% decline may be due to shipping delays. This discrepancy suggests that prices will likely fluctuate until more authoritative mid-month data clarifies the strength of demand.
Q: How do fluctuations in the Malaysian Ringgit exchange rate affect the international competitiveness of palm oil?
A: Palm oil is priced in the ringgit. When the ringgit depreciates against the US dollar, international buyers (holding US dollars) pay less in dollars for the same quantity of palm oil, meaning a lower price. This currency weakness typically benefits exports and attracts purchasing interest from major importing countries such as India and China.
Q: Why did the price trend of soybean oil become a support for the rebound of palm oil?
A: Soybean oil and palm oil are substitutes for each other. When soybean oil prices rise in Dalian or Chicago, palm oil's cost-effectiveness becomes more apparent. Price-sensitive buyers will switch to purchasing palm oil, thus driving a recovery in palm oil demand. Therefore, soybean oil prices are often used as a reference point for palm oil price fluctuations.
- 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.
