March palm oil prices seen supported by lower output, firmer demand: industry body

Crude palm oil prices are expected to trade between MR4,000 and M4,300 ($1,027.35-$1,104.41) per metric ton in March, supported by seasonal declines in production and stocks, industry body, the Malaysian Palm Oil Council, or MPOC, said Feb. 23.

Palm oil prices have remained firm above MR4,000/mt throughout January despite lingering headwinds such as a delay in Indonesia's B50 biodiesel mandate, and elevated stock levels in Malaysia, suggesting current prices are forming a near-term structural floor, MPOC said.

The two countries are the world's largest vegetable oil exporters and account for 85% of the global palm oil supply.

"Palm oil fundamentals are expected to gradually improve in the coming months," the council said, citing stronger Malaysian exports in the first quarter and Indonesia's front-loading of shipments ahead of the March export levy hike.

Benchmark crude palm oil prices have fallen 5.6% since the end of January after hitting a two-month high of MR4,318/mt on Jan. 29.

The May delivery crude palm oil futures contract on the Bursa Malaysia derivatives exchange was up 0.5% at MR4,073/mt at the close of morning trade Feb. 24.

While palm oil prices are up in early Asian trade, supported by stronger soybean oil prices overnight on the Chicago Board of Trade, technical analysis suggests a bearish trend, Kuala Lumpur-based Aminvestment Bank said.

In global vegetable oil markets, premiums for both soybean oil and sunflower oil widened against palm oil in January, MPOC said, further enhancing palm oil's relative price competitiveness. As a result, MPOC expects global import demand for palm oil to overtake soybean oil in Q1 2026.

The three vegetable oils compete for market share in global markets.

On the demand side, India is expected to shift consumption back toward palm oil following improved price competitiveness since late 2025, the council said.

Trade, currency concerns linger

MPOC's rangebound outlook was tempered by weaker trade data from both Malaysia and Indonesia.

In a separate release, cargo surveyor Intertek Testing Services, or ITS, said that Indonesia's palm oil exports fell 14.4% month over month to 2.27 million mt in January as the top three buyers, India, China, and the EU reduced purchases.

ITS had also reported that Malaysia's palm oil exports fell about 9% in the first 20 days of February compared to the same time period in January on Feb. 20.

Meanwhile, the Malaysian currency has held at its strongest position against the US dollar since 2018. A stronger ringgit weighs on the export competitiveness of palm oil and overseas buying interest in ringgit-denominated futures.

Platts, part of S&P Global Energy, assessed the price of crude palm oil FOB Indonesia at $1,122.5/mt Feb. 24, down 0.22% from the day before.