The palm oil market staged a notable rebound this Thursday, reversing two days of losses amid renewed buying interest and a shift in expectations for June production. While bargain hunting and stronger crude oil prices provided uplift, gains were partially capped by continued weakness in competing vegetable oils. Today’s early session saw Malaysian palm oil futures rise nearly 2% in sympathy with firmer energy markets, underscoring palm oil’s sensitivity to broader commodity trends.

After a subdued start to June driven by concerns over sluggish export demand and competitive pricing from alternative oils, supply-side factors are now more in focus. Traders are weighing the likelihood of only a gradual production increase, with Malaysian output seen rising less quickly than in past years. At the same time, the global oilseed complex and macro market sentiments remain decisive for palm oil’s trajectory, as does the impact of key weather developments in SE Asia and beyond.

As the market recalibrates, the latest price action and a careful review of supply and demand drivers—including recent USDA and MPOB data, stock movements among major exporters and importers, as well as speculative positioning—provide valuable insight into future direction. Here’s a comprehensive breakdown of the palm oil market as of mid-June 2025.

📈 Prices: Latest Palm Oil Contracts (MDEX, MYR/t)

Market focus: July and August contracts lead volume; sentiment improved as energy markets strengthened.

🌍 Supply & Demand Drivers

• Production Outlook: Malaysian production is expected to rise only gradually in June—much slower than typical mid-year increases, supporting prices.
• Exports: Demand from major importers (India, China, EU) has shown modest recovery, with India’s import duty structure still favorable to palm oil.
• Competing Oils: Soybean and sunflower oil prices remain under pressure, dampening palm oil gains but maintaining its competitiveness in the global mix.
• Inventory: Malaysian Palm Oil Board (MPOB) data shows relatively steady stocks, with only a minor drawdown in May and a flat outlook for June.
• Speculative Positioning: Managed funds have slightly increased long positions after recent sell-offs, reflecting improved sentiment.

📊 Fundamentals Snapshot

• Global Production (2024/25): Indonesia ~48.3 Mt, Malaysia ~18.4 Mt
• Key Importers’ Stocks: India ~1.1 Mt, China ~0.5 Mt (steady week-on-week)
• Biofuel Demand: Indonesia's B40 mandate expected to support local consumption; Malaysian biofuel uptake growing at a slower pace
• Comparative Outlook: The previous monthly report highlighted generally weak prices—today’s data confirm a turn towards stabilization

☀️ Weather Outlook & Crop Impact

• Southeast Asia: Rainfall in Malaysia and Indonesia remains moderate, favorable for crop development. El Niño effects have largely faded, with La Niña risks rising into Q3, which may further support palm yields if realized.
• India: Pre-monsoon showers are on track; planting conditions are average. No major weather threats reported for other major importers.

🌎 Major Exporters vs. Importers: Production & Stocks Table

📌 Trading Outlook & Strategy

• Monitor further upside triggered by crude oil or adverse weather: upside momentum may persist if June production slows as forecasted.
• Keep an eye on competing oilseeds—should soyoil prices recover, palm oil’s support could wane.
• End buyers may lock in spot or short-term supplies amid improved demand signals and steady stocks.
• Exporters: Consider hedging a portion of Q3 bookings while speculative interest recovers.
• Watch regulatory developments on biofuel mandates for long-term direction.

📆 3-Day Regional Price Forecast

Forecast: Prices are likely to trend slightly higher over the next three sessions given current market momentum, but are sensitive to global oilseed developments and weather.