On Friday (September 15), palm oil futures on the Malaysian Derivatives Exchange initially rose before declining. The benchmark November contract closed at 4,883 ringgit per tonne in Asian trading, up 33 ringgit, or 0.7%, from the previous trading day; the December contract climbed as much as 38 ringgit to 4,888 ringgit during the session. Overnight strength in competing vegetable oils, coupled with lingering concerns about the potential impact of El Niño-related hot and dry weather on production, provided support for the market. During the Kuala Lumpur trading session, Kenanga Futures, in a research report, placed the resistance level for the November contract at 4,950 ringgit per tonne. That afternoon, the Malaysian Palm Oil Board (MPOB) announced on its website that the October reference price for crude palm oil was RM4,452.66 per tonne, a slight increase from RM4,392.32 in September. The corresponding export tariff remained locked at 10% . This is the highest tier in the tariff bracket—a 10% tariff is triggered when the price of crude palm oil exceeds RM4,050 per tonne, while the lowest tier of 3% applies to the RM2,250-2,400 range. The increase in the reference price did not push up the tariff rate, reflecting that spot prices remain high but have not yet broken through the threshold of higher tariff brackets. What truly put pressure on the market was the divergence between two sets of export inspection data. Shipping surveyor Intertek Testing Services (ITS) estimated that Malaysia's palm oil exports from September 1st to 15th totaled 560,292 tons, a 17.8% decrease from 681,266 tons in the same period of August. Breaking down the data, crude palm oil exports increased from 143,320 tons to 187,470 tons, RBD palm oil stearin decreased from 47,118 tons to 31,015 tons, and RBD palm oil fell from 54,670 tons to 37,550 tons. In terms of destinations, EU purchases decreased significantly from 131,046 tons to 87,427 tons, while India and the subcontinent saw a significant increase from 120,320 tons to 175,430 tons, becoming the only major market with a substantial increase. Another inspection agency, AmSpec Agri Malaysia, provided an even steeper decline, estimating that exports in the first half of September fell by 26% month-on-month to 496,160 tons, compared to 667,257 tons in the same period of August. Specifically, crude palm oil increased from 161,821 tons to 206,732 tons, RBD palm oil stearin decreased from 54,219 tons to 31,616 tons, and RBD palm oil fell from 54,829 tons to 47,050 tons. The difference in the total decline figures between the two institutions mainly stems from their different treatment of refined product statistics, but the direction is consistent— weak refined palm oil exports are the main drag on the overall market. Looking at the monthly export rhythm, Malaysia's total palm oil exports in August were 1,364,494 tons, a 14.9% decrease from July's 1,602,475 tons, after a significant 19.5% month-on-month increase in July. The data for the first half of the month continued the slowdown trend since August, but crude palm oil exports bucked the trend and increased, suggesting that some buyers are adjusting their purchasing structure, preferring to directly import raw materials rather than refined products. The rebound in purchases from India and the subcontinent may be related to local inventory depletion and holiday stockpiling demand. It is worth noting that maintaining the export tax at 10% means that the cost competitiveness of Malaysian crude palm oil in the international market will not change in the short term due to tax adjustments. If subsequent export data continues to show weakness in refined products while crude palm oil remains relatively strong, refining profits in producing countries may face further pressure, thereby affecting refinery operating rates. Regarding weather, the hot and dry conditions associated with El Niño remain a potential supply variable, but current market pricing reflects more of a forward risk premium than an immediate production cut. Traders should closely monitor the revised export figures for September, whether Indonesia will follow suit with its export tax policy, and changes in inventory levels and shipping pace in major importing countries.

Frequently Asked Questions

Why did Malaysia's crude palm oil export tax remain at 10% in October? The MPOB set its October reference price at RM4452.66 per tonne, higher than September's RM4392.32. According to the tax tiers, prices exceeding RM4050 are subject to the highest 10% rate; therefore, while the reference price increased, the tax rate remained unchanged. Why did export data for the first half of September show two declines of 17.8% and 26%? ITS statistics show a total of 560,292 tons, while AmSpec's figure is 496,160 tons. The difference mainly stems from the treatment of refined products such as RBD palm oil stearin. Both institutions indicate a decline in refined product exports, showing a consistent trend. Which market's purchasing changes are most noteworthy? India and the subcontinent saw the only significant increase, rising from 120,000 tons to 175,000 tons; purchases from the EU and other major importing countries fell sharply. The increase in crude palm oil exports against the trend reflects buyers' preference for raw materials over refined products. How much influence are weather factors currently having on the market? El Niño's anticipated dry and hot weather provides a forward risk premium, leading Kenanga Futures to set a resistance level of 4950 ringgit for its November contract. However, immediate production cuts have not yet been confirmed, with weather conditions providing more sentiment support than a real supply shock. What variables need to be monitored going forward? These include the revised export figures for September, whether Indonesia's export tax policy will be adjusted, the inventory levels and purchasing pace of major importing countries, and the impact of changes in refining margins in producing countries on refinery operating rates.