Export data boosted sentiment as palm oil ended a three-game losing streak

On Wednesday (October 15), the palm oil market on the Malaysian Derivatives Exchange ended a three-day losing streak. The main contract closed at 4,474 ringgit/ton, up 13 ringgit on the day, or 0.29%. The recovery was mainly due to the marked improvement in export data for the first half of October released today, which provided important support to the market.

Export growth has become a market turning point

The focus of market attention today is undoubtedly the export data for October 1-15. According to information released by the shipping survey agency, the export volume of palm oil products in Malaysia increased by 12.3% to 16.2% during this period compared with the same period last month. This strong growth effectively eased the market's concerns about weak demand and became the direct cause of the price rebound. However, the overall market increase was limited, reflecting that bullish sentiment was still constrained by other factors.

Paramalingam Supramaniam, a director at Pelindung Bestari, a Selangor brokerage, said: "Despite the positive export data, ending inventories are still at a high level, and coupled with the uncertainty of trade settlements between major economies, the market remains vulnerable to intermittent selling pressures." His comments point directly to the central contradiction in the current market: short-term gains are difficult to fully offset long-term structural pressures. Last week's industry regulator data showed that Malaysia's palm oil inventories had climbed to a near two-year high in September, a fact that, like the sword of Damocles, continues to hang over the market. According to Zhonghui, market participants are highly vigilant about changes in inventories in the future market.

Linked markets and macro conditions exert pressure

From the perspective of the external market, the rebound momentum of palm oil has not received a strong response. On the same day, soybean oil and palm oil futures contracts on the Dalian Commodity Exchange fell by 0.22% and 0.47% respectively. Although soybean oil prices on the Chicago Board of Trade rose slightly by 0.16%, the overall peripheral oil market performance was flat, limiting the upside of palm oil.

The energy market also sent mixed signals. Crude oil prices edged lower during the day as the International Energy Agency forecast a potential supply glut in 2026 and trade tensions between major economies threatened to dampen demand. The weak outlook for crude oil has undermined the economic appeal of palm oil as a biodiesel feedstock. On the other hand, the ringgit exchange rate weakened by 0.02% against the dollar, which made palm oil priced in ringgit slightly cheaper for overseas buyers, but the positive impact was relatively limited.

Potential policy variables and future market prospects

New variables have emerged at the policy level. Indonesia's energy minister said that it may regulate the export of crude palm oil to ensure the supply of domestic biodiesel raw materials. If this potential policy is implemented, it will change the global supply pattern of palm oil in the medium and long term, which may support prices. Meanwhile, Malaysia has cut the reference price of crude palm oil in November to maintain the level of 10% export tariff, a move aimed at maintaining the competitiveness of its exports. China Exchange Analysis believes that the trend of policy will be one of the key variables affecting the future market.

Taken together, the current palm oil market is in a game of short-term positive and long-term concerns. Strong export data has successfully contained the decline, proving the existence of a bottom line of demand. However, the objective reality of high inventories and the uncertainty of the macro environment have combined to create a pressure area above prices. Whether the market can build a solid bottom and start a more sustained recovery after today's rebound remains to be seen whether the subsequent export momentum can continue, as well as the policy trends of major producers. Traders need to pay close attention to the upcoming export data for the longer term, as well as the actual progress of inventory removal.