On Wednesday (October 21), the January palm oil contract on the Malaysian Derivatives Exchange closed down 49 ringgit, or 1.02%, at 4,768 ringgit per tonne. Profit-taking occurred near the upper end of the trading range, erasing the previous week's gains. On the same day, soybean oil on the Dalian Commodity Exchange rose 0.26%, palm oil rose 1.31%, while Chicago soybean oil fell 0.12%. International crude oil rose by more than $1 per barrel, with Brent crude near a five-month high. Attacks on Middle East shipping and a lack of diplomatic progress in the Iranian situation amplified concerns about supply disruptions, while declining US crude oil and refined product inventories also provided support. This combination of prices and news formed the trading backdrop for the edible oil sector that day: palm oil's near-term momentum remained strong , but divergence had emerged at higher levels.

Palm oil: The tug-of-war between surging exports and record inventories

A Kuala Lumpur trader stated, "Prices retreated near the upper end of the trading range due to profit-taking." Palm oil, after failing to break through the resistance level of 4834 ringgit/ton, may retrace to 4706-4736 ringgit/ton. Fundamental news is not weak: cargo surveyors estimate that Malaysian palm oil product exports increased by 58.5% to 78.4% week-on-week from October 1st to 20th (Beijing time), pushing BMD futures to a four-week high. Market sentiment suggests that the edible oil sector remains constructive but with increased volatility. Palm oil has the strongest near-term momentum , and high inventory levels mean the next major confirmation must come from continued exports and a visible decline in inventory. The key pressure lies here: Malaysian inventories remain near a record 3.51 million tons , and strong exports need to continue for several weeks before the market can confidently price in inventory reduction. Discussions in Malaysia regarding possible export policy support are a new variable beyond demand signals. Stronger crude oil prices have increased the attractiveness of palm oil as a feedstock for biodiesel; palm oil futures rose as much as 2.9% to 4,817 ringgit per tonne in the week ending October 21 Beijing time, supported by crude oil prices near $110 per barrel and concerns about supply in Indonesia.

Soybean oil, rapeseed oil, and sunflower oil: three differentiating lines

On the soybean oil side, pressure from the US soybean harvest continued to weigh on futures, despite a recovery in Chinese purchases; soybean oil's resilience stemmed from higher energy prices and biofuel demand. As of the week ending October 21st Beijing time, CBOT soybean oil fell 1.9% to $1470/ton. Rapeseed and canola remained under pressure from improved supplies in Canada and Europe, but biofuel demand and firm crude oil prices prevented further declines. Sunflower oil exhibited a "two-speed" pattern: increased Black Sea harvest supplies were bearish in producing regions; freight rates, logistics, and delayed shipments kept near-month destination prices relatively firm. Indian sunflower oil CIF Bombay prices rose to $1400-1420/ton, providing selective support for sunflower oil. In Ukraine, as of the week ending October 21st (Beijing time), sunflower seed prices fell another 500-1000 hryvnia/ton to 15500-17000 hryvnia/ton, with increased domestic supply due to the harvest. As of October 19th (Beijing time), 9.077 million tons had been harvested, covering 79% of the planted area. Sunflower oil prices weakened to $1000-1100/ton at FCA plants, while EU delivery prices remained at $1340-1360/ton. The conclusion is that Ukrainian sunflower seed prices are bearish, but global sunflower oil prices are supported by limited shipments from the Black Sea. Only improved export logistics can release accumulated supply and increase international price pressure later in the season.

Black Sea and Indonesia: Long-Term Variables Enter Pricing

Ukraine's oilseed production is projected to increase by 11% to 21.5 million tons in 2026/27, but disruptions to seaborne exports threaten crushing activity and may increase carryover stocks. Market observers believe sunflower seeds will face the greatest pressure, soybeans will be relatively stable, and rapeseed will benefit from European demand. Increased production does not guarantee stronger prices; unless export logistics improve, inventory and storage costs will continue to weigh on Ukrainian oilseed prices, with rapeseed being the strongest and sunflower the most vulnerable. Indonesia's palm oil exports are expected to decrease by approximately 5 million tons to 26.5 million tons in 2027, as the full implementation of the B50 program pushes biodiesel demand to 17.4 million tons, and El Niño reduces production potential. GAPKI warns that higher export taxes could depress domestic palm oil prices and hurt smallholder fresh fruit bunch (FQB) prices. Tightening Indonesian exports could support global vegetable oil prices; however, higher taxes would be detrimental to domestic FQB growers. China's expansion of sustainable aviation fuel production capacity will enhance its future renewable fuel export potential and create a new competitive variable in the global low-carbon fuel market.

Market logic and subsequent verification

The core issue in this round of palm oil price fluctuations is not whether the demand story holds true, but whether improved exports can lead to a visible decline in inventories over several consecutive weeks . With inventories around 3.51 million tons, a single surge in exports is insufficient to change the pricing anchor; profit-taking at the upper end of the range reflects traders' rebalancing of high inventory and high oil price support. Improved rapeseed supply is a slow variable, while crude oil is a fast one; the differentiation between sunflower oil production and sales regions is driven by logistics, not solely by production volume; soybean oil is supported by biofuel demand, but soybean harvest pressure limits upside potential. Subsequent key indicators include: Malaysia's October exports and inventories, the implementation of Indonesia's B50 and export tax policies, the recovery of Black Sea logistics, and the sustainability of the crude oil risk premium. In the long term, tightening Indonesian exports and increased Ukrainian production move in opposite directions; the former supports global prices, while the latter is bearish. However, for the latter to translate into international price pressure, improved logistics are still needed as a turning point.

Frequently Asked Questions

Q: Why did palm oil exports decline despite improvement? A: Palm oil closed down 1.02% on October 21st (Beijing time), with traders attributing it to profit-taking at the upper end of the range. The export benefits have already been partially priced in at four-week highs, and the 3.51 million tons of inventory still needs to be verified by destocking. Q: How strong are Malaysian export data? A: From October 1st to 20th (Beijing time), exports increased by 58.5% to 78.4% week-on-week, providing key support in the near term, but it will take several weeks to confirm a decline in inventory. Q: How to view the divergence between soybean oil and palm oil? A: Dalian Commodity Exchange soybean oil rose 0.26%, palm oil rose 1.31%, while CBOT soybean oil fell 0.12%. Soybean oil is supported by biofuels, while soybean harvest pressure limits upside potential. Q: Why is sunflower oil performing strongly in consuming regions despite weak production areas? A: Ukrainian sunflower seed prices have fallen to 15,500-17,000 hryvnia/ton, while FCA sunflower oil prices are quoted at $1,000-1,100/ton, and EU deliveries at $1,340-1,360/ton. Logistics restrictions in the Black Sea are supporting sales areas. Q: What are the long-term impacts of Indonesian policies and Ukrainian production? A: Indonesian exports may decrease by 5 million tons to 26.5 million tons in 2027, supporting global prices, but export taxes and fees are putting pressure on domestic fresh fruit bunches. Ukrainian production is expected to increase by 11%, which is bearish; improved logistics will alleviate the pressure.