CPO futures plunge to six-week low as Malaysian stocks near 3 million tonnes

BURSA MALAYSIA DERIVATIVES, 25 SEPTEMBER 2026 —

Crude palm oil futures on Bursa Malaysia Derivatives fell to a six-week low on Friday, with the October 2026 contract dropping RM89 to RM4,475 per tonne, as rising Malaysian inventories and weaker export demand weighed on prices.

Industry analysts warn stocks could exceed 3 million tonnes this month—the highest since December 2025—amid slower shipments and elevated production during peak harvest season. The physical CPO price for October South also slipped RM50 to RM4,530 per tonne, reflecting broader market weakness.

Malaysia’s stockpiles have breached the 3-million-tonne mark only five times before, most recently in December 2025, when futures crashed to RM4,000 per tonne. The Malaysian Palm Oil Association (MPOA) attributes the current buildup to September’s peak output and weaker demand from India, the world’s largest importer.

Stockpiles at critical threshold Cargo surveyor data showed Malaysia’s palm oil exports in the first 20 days of September fell by up to 25% from the same period a month earlier. Tajgir Rahman, general manager of trading and procurement at International Foodstuffs (IFFCO), said stocks are “likely to rise above 3 million tonnes by month-end,” adding that prices will only stabilise once production declines and exports recover.

Roslin Azmy Hassan, CEO of the MPOA, said stocks would start easing from October as production falls, but the pace depends on demand from India and China. India’s import pace is expected to slow after aggressive purchases in August and September, while a narrowing discount to rival oils like soy and sunflower has prompted buyers to diversify, according to a New Delhi-based dealer.

El Niño’s delayed squeeze Despite Malaysia’s below-normal rainfall linked to El Niño—a phenomenon meteorologists say is exceptionally strong this year—palm yields typically respond to weather conditions with a lag. The full impact on production is not expected until mid-2027, leaving near-term price support limited.

Fastmarkets Palm Oil Analytics senior analyst Sathia Varqa said the stronger ringgit has further dampened sentiment, capping futures above RM4,600 per tonne with resistance at RM4,750. Traders note that while Indonesia—the world’s top producer—has lower costs, the combined output pressure from both nations is weighing on global prices, particularly as India’s import demand wanes.

Outlook: demand-driven recovery Industry officials agree that any near-term rebound hinges on demand. Sandeep Bajoria, CEO of Sunvin Group, said India’s import pace will slow from October, while a New Delhi-based dealer noted palm oil’s narrowing discount to rivals has prompted buyers to shift preferences. Rahman of IFFCO sees limited near-term weakness, predicting a rebound once production cuts and export growth become visible.

The next critical data points will be October’s production figures and India’s import trends, which could determine whether the market tests RM4,000 per tonne again. With El Niño’s effects still unfolding, traders remain cautious, monitoring both supply dynamics and buyer behaviour closely.

Related: Bursa Malaysia Derivatives